IRS CRACKS DOWN ON TAX ID THEFT: COULD YOU BE A VICTIM?

Kash Chandani & Company CPAs, helping our clients with identity theft issues for over 37 years. Contact us at (805) 494-4334 if you have any questions.

For the past several years, the IRS has been cracking down on a frightening problem: identity theft schemes that are aimed at stealing taxpayers’ refunds. When this type of fraud occurs, an individual’s refund can be delayed for months or longer. Here’s a look at how tax identity theft works, along with steps you can take to help protect yourself from becoming a victim — and what to do if your identity is stolen.

IRS CRACKS DOWN ON TAX ID THEFT: COULD YOU BE A VICTIM?

An identity thief generally uses a legitimate taxpayer’s identity and Social Security number to fraudulently file a tax return and claim a refund. This is usually done early in the tax filing season. The victim typically finds out about the fraud after he or she files a tax return and is informed by the IRS that the return has been rejected because the Social Security number has already been used to file a tax return for the same tax year. The IRS then delays processing the refund until it can determine who the legitimate taxpayer is. How do thieves obtain Social Security numbers? They may hack into victims’ computers or the unsecured websites and networks of businesses. Sometimes, criminals make phone calls pretending to be calling from a business that needs information. Other times, they buy information from informants who have access to Social Security numbers at their jobs. The IRS itself was hacked earlier this year and individuals stole information regarding approximately 100,000 accounts. The data breach affected taxpayers who used the “Get Transcript” application on the IRS website. If you’re an employer, you can also be a victim of tax identity theft. The Employer Identification Number of a real organization could be fraudulently used to report fake earnings and withholding. The IRS may issue a refund to the thief before it realizes that there is no matching, legitimate paperwork from an employer.

There’s no way to fully protect yourself from tax-related identity theft but there are steps you can take to minimize your chances of being a victim: don’t give out your Social Security number to businesses or medical providers just because they ask for it, shred documents with personal identifying information, don’t provide information in response to email or text messages, don’t give personal information over the phone unless you initiated the contact or you know whom you’re dealing with, and don’t carry your Social Security Card around with you. The Social Security Administration advises consumers to “ask why your number is needed, how it will be used, and what will happen if you refuse.”

Immediately respond if you receive a letter or notice from the IRS stating that another return has been filed with your information or that you received wages from an employer other than your actual one. You may be asked to confirm your identification on the IRS website through the Identity Verification Service (IDVerify) or by phone at the IRS toll-free number provided in the letter. You should also prepare and submit an Identity Theft Affidavit on IRS Form 14039. If you’re a victim of tax identity theft, you should also get an Identification Number from the IRS that proves you are the legitimate filer of future tax returns. The IRS issues an Identity Protection Personal Identification Number (IP PIN) to identity theft victims whose identities have been validated. It allows legitimate returns to be processed, and prevents processing of fraudulent returns. In addition to contacting the IRS, the government recommends that all identity theft victims file a complaint with the FTC at www.consumer.ftc.gov and file a local police report.

Take Identity Theft Seriously Tax return fraud can cause major headaches to straighten out and significantly delay legitimate refunds. Let us know if you have any concerns about fraud and your tax return.

If you need an accountant who will fight for you, contact Kash Chandani & Company CPAs (805) 494-4334. We help our clients save and recover their money.


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