Identity theft is one of the fastest growing crimes nationwide, and tax refund fraud caused by identity theft is a major challenge facing taxpayers. According to a Government Accountability Office report, fraudulent tax refunds were estimated at $5.2 billion for the 2013 tax filing season.
The Virginia Society of Certified Public Accountants (VSCPA) offers the following advice to help you guard against tax return and other forms of identity theft.
What Is Tax Return ID Theft?
“Identity thieves often use a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund. However, many individuals who are identity theft victims are unaware that their identities have been stolen to file fraudulent tax returns,” says Margaret Van Brunt, CPA, assistant dean at Rowan University’s Rohrer College of Business. “It’s not until legitimate taxpayers file returns resulting in duplicate filings under the same names and Social Security numbers that they realize they are victims of identity theft.”
Be alert to possible tax-related identity theft if you receive a U.S. Internal Revenue Service (IRS) notice or letter that states any of the following:
- More than one tax return for you was filed.
- You have a balance due, refund offset, or have had collection actions taken against you for a year you did not file a tax return.
- IRS records indicate wages received from an unknown employer.
The IRS recommends you take the following steps to protect your tax and financial information:
- Don’t carry your Social Security card or any documents that include your Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN).
- Don’t give personal information over the phone, via the mail or on the Internet unless you have initiated the contact or know exactly who you are dealing with.
- Check your credit report every 12 months.
- Secure personal and financial information.
- Use firewalls and anti-spam/virus software, update security patches and periodically change passwords for Internet accounts on your personal computer.
If you become a victim of identity theft, the IRS recommends you take the following steps right away:
- Contact the IRS Identity Protection Specialized Unit at (800) 908-4490, ext. 245, so that steps can be taken to secure your tax account.
- Report ID theft incidents to the Federal Trade Commission (FTC) at consumer.ftc.gov or the FTC Identity Theft Hotline at (877) 438-4338.
- File a report with the local police.
- Contact the fraud departments of the three major credit bureaus: Equifax, equifax.com, (800) 525-6285; Experian, experian.com, (888) 397-3742; and TransUnion, transunion.com, (800) 680-7289.
- Close any accounts that have been tampered with or opened fraudulently.
Turn to Your Local CPA
Your local CPA can help you understand your money management issues. Be sure to contact him or her with all of your financial questions and concerns.