All You Need to Know About Tax Identity Theft

The nightmare scenario: you go to file your taxes, only to discover someone has beaten you to it using your own Social Security number. This is tax identity theft, and the fallout can be significant. From delayed refunds to damaged credit, understanding this crime and how to combat it is essential for every taxpayer.

What is Tax Identity Theft?

Tax identity theft happens when someone uses your stolen personal information—including your Social Security number (SSN), name, and date of birth—to file a fake tax return and receive a refund from the IRS. This information may also be used to perpetrate other financial crimes, including opening credit accounts or obtaining loans.

What the IRS Will Never Do:

It's important to remember that the IRS has specific procedures and knowing what they won't do is a key defense against scams.

The IRS will never:

1. Initiate contact by email.
2. Request personal or financial information via text or social media.
3. Call taxpayers with threats of lawsuits or arrests.
4. Call, email, or text to request taxpayers’ Identity Protection PINs.
5. Ask taxpayers to wire money, pay with a prepaid debit card, or share credit card information over the phone.

If you receive a suspicious communication claiming to be from the IRS, do not engage. Instead, contact the IRS directly.

How to Protect Yourself:

While you can't entirely eliminate the risk of identity theft, you can take steps to minimize it:

• Protect your SSN: Never share your SSN over the internet or with unverified callers.
• Be cautious online: E-filing is generally faster and more secure than mailing a paper return. It minimizes the number of people who handle your sensitive information, decreasing the chance of it being intercepted. If filing taxes electronically, be sure to use a secure internet connection and a reputable tax filing service.
• File your tax return as early as you can: Early filing can protect you against identity thieves attempting to file a fraudulent return under your name. The sooner you submit your return, the sooner it enters the system, which significantly reduces the chances of a thief successfully filing a fake return in your name. Additionally, if someone attempts to file a return using your SSN after you have already filed, it will be flagged by the IRS as a duplicate.
• Be cautious of mail theft: If you need to file your taxes by mail, send your return directly from the post office. This provides a slight sense of added security. However, it's essential to recognize that thieves can still access mailboxes, including those at post offices, and potentially intercept mail during transit.
• Before using a tax preparation professional, thoroughly research their credentials: It's crucial to thoroughly research and choose a qualified and trustworthy professional, as not all tax preparers are created equal. Look for credentials like CPA, Enrolled Agent, or membership in professional organizations. A reputable tax professional not only helps you file your taxes accurately but also acts as a guardian of your sensitive information, reducing your risk of falling victim to tax identity theft.

What to Do If You're a Victim:

If you suspect you're a victim of tax identity theft, Don't delay. The sooner you inform the IRS, the sooner they can start working to correct the fraudulent activity and prevent further damage. You must immediately call the IRS Identity Theft Hotline at 1-800-908-4490 or file a report here. Early intervention is key to minimizing the impact of tax identity theft.

Additional Resources:

• IRS Identity Theft Information: https://www.irs.gov/identity-theft
• FTC Identity Theft Website: https://www.identitytheft.gov/

Tax identity theft is a serious issue, but by being informed and proactive, you can significantly reduce your risk and protect yourself from its devastating consequences. Don't hesitate to contact the resources listed above if you have any questions or concerns. Staying vigilant is the best defense.