In today’s digital society, it’s easier than ever for criminals to steal information and commit fraud. Thieves use names and Social Security numbers to file tax returns and claim refunds that aren’t theirs. Of the 145 million returns that were filed in 2011, the IRS pulled 2.6 million for possible identity theft.
Thieves operate in many ways, stealing information through email claiming to be from the IRS asking for information, telephone phishing, and even going through garbage in search of personal information. Keep in mind that the IRS never sends unsolicited, tax-account-related emails to taxpayers, and never asks for information via email.
The Journal of Accountancy offers guidelines for both how to prevent identity theft and what to do if you’ve already experienced theft.
What To Do If Your Identity Has Been Stolen
- Report the theft to the Federal Trade Commission at 877-438-4338, ftc.gov/complaint, or 866-653-4261.
- File a report with the local police.
- Close any affected bank and credit card accounts.
- Inform the credit bureaus, and consider putting a credit freeze on the accounts.
- If personal information is lost or stolen during the year, contact the IRS Identity Protection Specialized Unit at 800-908-4490, and complete Form 14039, if necessary. (Expect to be patient, though. The National Taxpayer Advocate noted in her semiannual report that “this unit has been unable to answer about two out of every three calls it has received from taxpayers so far this year. At times during the filing season, it was answering only about one out of every nine calls it received—and those who managed to get through waited an average of over an hour to speak with an employee.”)
- Respond to all IRS notices immediately, using the name and number printed on the notice.
How to Prevent Theft
- Arrange for a masked SSN where possible (on insurance cards, for example).
- Watch credit reports from the three major credit bureaus. (Contact details for the fraud departments of the three major credit bureaus are: Equifax–equifax.com, 800-525-6285; Experian–experian.com, 888-397-3742; and TransUnion–transunion.com, 800-680-7289.)
- Forward all information appearing to be from the IRS to your CPA promptly and don’t click on links or open attachments from emails claiming to be from the IRS.
- Safeguard your Social Security card, storing it in a secure location, and don’t discard any documents with an SSN on them.
- Resist giving businesses an SSN or other personal information just because they ask for it—often it’s not required.
- Protect financial information by using a shredder before discarding documents.
- Secure personal information in your home. (For example, copies of tax returns can be kept in a locked file cabinet or safe.)
- Protect personal computers by using firewalls and anti-spam or anti-virus software, updating security patches, and regularly changing passwords for internet accounts with sensitive information, such as online banking sites.
- File your return early.
If you put protections into place, you’ll significantly reduce your chances of becoming a victim.