By Deidre Davis
As tax season approaches, you may find yourself preparing and organizing your financial records in preparation of filing your tax return. You’re focusing on account statements, receipts and deductions, but you’re probably not thinking about tax identity theft. In 2014, the Government Accountability Office reported that the IRS paid $5.8 billion in fraudulent tax refunds. While they prevented 81 percent of fraudulent refunds, that amount is staggering. Review the following information to help protect your information, and your refund, this tax season.
What is tax identity theft?
Tax identity theft occurs when someone files a fake tax return using your personal information — most commonly using your Social Security number (SSN) — to receive a tax refund from the IRS. It also happens when someone uses your SSN to gain employment or claim your child as a dependent on a return. Common red flags include being paid by an employer you do not know or the IRS contacts you about your legitimate tax return being a duplicate return.
There are many ways thieves steal your personal information. Here are some examples:
- “Dumpster Diving” in your trash looking for mail containing personal information, stealing mail from your mailbox or stealing information from inside your car.
- Phony letters, emails or calls appearing to be from the IRS asking for personal information.
- Employees at services you use, such as hospitals and tax preparation companies, handling your information inappropriately.
Here are ways to prevent tax identity theft:
- Think of it as a footrace: file your tax return early and beat identity thieves to the finish line.
- Use a secure Internet connection if filing electronically. Do not use unsecure, public Wi-Fi hotspots.
- Mail your tax return directly from the post office.
- Shred copies of your tax return and any other documents used. For those that need to be kept, lock them in safe places and avoid carrying them with you.
- Respond to IRS letters and calls as soon as possible.
- Be aware that the IRS will not contact you via email, text or social media. If the IRS needs information from you, it will first contact you by mail.
- Do not give out your SSN or Medicare number unless required. If uncertain, ask questions as to why the number is needed, how it will be used and how it will be stored.
- Research tax preparers thoroughly before using their services and seek recommendations from those you trust.
While the IRS is working to prevent tax identity theft, it is not the only way taxpayers are being victimized. IRS imposters are contacting individuals claiming they need to pay unpaid taxes or threatening that they’ll be arrested. If an imposter contacts you, it is possible he or she already knows all or part of your SSN as well as other information.
Often, the caller will ask you to place the money you owe on a prepaid debit card and provide him or her with the card number. This is not actual IRS protocol. To ensure you do not owe anything on your federal taxes, you can call the IRS at (800) 829-1040 or visit irs.gov. Remember the IRS will contact you through mail and will not ask for payment on prepaid debit cards, wires or request credit card numbers over the phone. You can report IRS imposter scams to the Treasury Inspector General for Tax Administration (TIGTA) at 800-366-4484, or report to the FTC at ftc.gov/complaint.