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Tax-Related Fraud

Tax-Related Fraud

In today’s Information Age identity theft and fraud are constant threats to be aware of. What you may not be aware of is tax-related identity theft. Tax-related identity theft occurs when someone uses your stolen social security number to file a tax return for a fraudulent tax refund. When this occurs you may not be aware until you e-file your return and it comes back rejected, because a return has already been filed, or you receive notification from the IRS stating there has been a suspicious return filed using your social security number.

Preventative Steps
As taxpayers, there are steps we can take to limit our exposure to tax-related fraud:

  • Don’t carry your social security card on your person or any documents containing your SSN.
  • Protect your personal information in a lockbox at home.
  • Install antivirus software on your computers.
  • Create strong passwords for internet accounts and change them on a regular basis.
  • Don’t fall for scam emails or phone calls asking for immediate tax payment. The IRS will not call you to demand immediate payment before sending a letter in the mail.

What to do if you are Victimized
In the unfortunate circumstance you become a victim of tax-related identity theft, there are necessary steps you must take:

  • File a complaint with the Federal Trade Commission at identitytheft.gov.
  • File complaints with the three major credit bureaus; Equifax, Experian and Trans Union. Contact Equifax.com or 1-800-766-0008; www.Experian.com or 1-888-397-3742; and www.TransUnion.com or 1-800-680-7289.
  • Contact your financial institutions and investigate any financial or credit accounts opened without your consent.
  • Respond immediately to any IRS notice. You may be requested to call or go to irs.gov.
  • Complete IRS Form 14039 if your e-filed return rejects because of a duplicate filing under your social security number.
  • Print out your tax return and send it in the mail.
  • You must continue to pay your taxes and file your tax return.

The IRS Takes Action
The IRS has taken many steps over the past few years to safeguard taxpayers against tax-related identity theft. During 2014 the IRS stopped more than $15 billion of fraudulent refunds. Nearly 2,000 people over the past few years were convicted of tax-related fraud, with prison terms averaging 38 months in 2013 and increasing to 43 months in 2014. While these numbers are impressive there is still a constant risk of being a target of tax-related fraud. Be vigilant about protecting your identity and keep in mind that the IRS has teams available to help if you become victimized. Utilize these resources to their fullest extent.

Article compiled by Stephen P. Collins. For additional information, please contact Craig Mengel at camengel@herbein.com.