trainWhen it comes to stealing individuals’ identities, criminals get more creative every day. Several clients have called us recently as they have received IRS letters asking questions regarding tax returns that they didn’t file. It usually turns out that a thief has stolen these clients’ identities and used the information to file fraudulent income tax returns—derailing their tax plans.

Another recent occurrence includes individuals receiving harassing phone calls from someone claiming to be from the IRS. This scammer threatens that an unknown tax debt must be paid immediately. The IRS will obviously never initiate those phone calls; all legitimate IRS collection notices are in writing. The scammer likely acquired the person’s name and phone number from another source and hopes to steal a quick buck.

If you haven’t yet fallen prey to tax return identity theft, then it could be just a matter of time. Consider these statistics:

  • Con artists collected more than $5.2 billion dollars from almost three million fraudulent income tax returns in 2013.
  • In spring 2015, hackers targeted TurboTax—the largest online filing service.
  • During May 2015, sophisticated criminals successfully accessed personal tax information from more than 100,000 taxpayers through an online IRS system.
  • The IRS predicts false income tax return claims will climb to $21 billion by 2016.

With proper precautions, hopefully you can avoid this situation entirely; for those of you who have already left the identity theft station, we’ve laid out the steps you should take—quickly.

Stop Tax Return Identity Theft Criminals in Their Tracks!

No one wants to deal with the hassle, lost productivity, and financial cost of identity theft. And while nothing is fool-proof, there are some simple steps to help protect your identity.

  1. Protect your Social Security number by limiting the times you provide businesses with it as a form of identification. In other words, make sure it’s necessary before sharing it. Additionally, do not carry your Social Security card in your wallet; leave it in a safe place instead.
  2. Conduct annual reviews of your credit report and Social Security Administration earnings statement.
  3. Safeguard your personal information. First, ensure that all computers and devices utilized both at home and work are using strong passwords, firewalls, anti-spam and anti-virus software, and security patches. Also, avoid disclosing personal information via phone, mail, or internet unless you initiate the contact or know the source is reputable.
  4. Remember how the IRS communicates. The agency never requests personal or financial information from taxpayers by email, text messages, or social media. So if you didn’t receive it via “snail” mail, then it’s a bogus IRS communication.

8 Steps for Cleaning Up a Tax Return Identity Theft Train Wreck

Even the most vigilant sometimes become victims of tax return identity theft. For those taxpayers already “hijacked” by identity thieves using their names and social security numbers to file a false tax return, we recommend following the below steps.

  1. Immediately notify federal and state tax authorities. The IRS has an Identity Theft Affidavit form, and many states have a similar process.
  2. Promptly contact the major credit bureaus to place a fraud alert on your credit records.
  1. Contact your financial institutions and credit card companies as soon as possible.  Close any accounts opened without your permission or accessed by unauthorized users.
  2. File a report with the local police.
  3. Register a complaint with the Federal Trade Commission.
  4. Notify your CPA.
  5. Respond immediately to any notices from the IRS or your state taxing authority.
  6. Continue filing your tax returns on time and paying taxes when due—even if you must file a paper tax return.

Apply the Brakes to Tax Return Identity Theft with Help from CRI.

Clients receiving IRS notices and contacting us are often some of the lucky ones since they’ve typically realized that there is an issue and acting quickly can often help avoid significant financial loss from identity theft. So if you learn that you’ve unexpectedly joined the express train of those targeted by con artists, CRI’s tax CPAs are here to get your tax situation back on the tracks.