Like it or not, tax season is nearly upon us. Next week, from January 31 to February 4, marks Tax Identity Theft Awareness Week. Fresh off the holiday season, this week doesn’t come as a reason to celebrate but rather serves to keep you prepared and aware of potential scams and identity theft issues that affect taxpayers of all kinds.
We want to provide you with some key insights and advice to help you to navigate your taxes more safely and securely.
What is Tax Identity Theft?
LibertyID recognizes tax identity theft as one of the 31 forms of identity theft. It’s a somewhat seasonal issue that can happen to virtually any tax paying citizen. To quote directly from the IRS, “tax-related identity theft occurs when someone uses your stolen personal information, including your Social Security number, to file a tax return claiming a fraudulent refund.”
Most forms of fraud are financially motivated, which holds true with instances of tax identity theft. Criminals will attempt to use your personal information to doctor bogus tax documents in hopes of tricking the IRS into sending them money. It might sound like a stretch, but it happens every year and it should be on your radar.
Another alarming aspect of identity theft is that this form of tax identity theft involves you in a bad way with a government agency. Not only can this form of identity theft defraud you of money in the form of a fake tax refund, but it can also put you in poor standing with everyone’s favorite entity, the IRS. If you remain unaware of the situation, tax identity theft can haunt you for years and affect your reputation when it is not resolved quickly. Potential back taxes, audits, and other issues are possible. You might even be on the hook for paying back a fraudulent refund in a worst-case scenario.
Recognize the Warning Signs
As with any instance of identity fraud, tax identity theft requires quick action on your part to deal with the issue swiftly and effectively. Unfortunately, this type of fraud can be difficult to spot until criminals have already attempted to use your information to file a fake tax return. Tax identity theft will not be detected through credit monitoring, and it can’t necessarily be witnessed in action by checking accounts, as is the case with credit card fraud.
This means that you need to recognize the warning signs of tax identity theft that indicate you may have fallen victim to it. Some of these signs include the following:
- Suspicious Tax Return Letter – If you receive a letter from the IRS regarding a tax return that you did not actually file, there’s a good chance that someone has filed a bogus document using your personal information.
- E-file Issues – Many people file their taxes electronically. Another sign that you might encounter as a victim of tax identity theft is your receiving a message stating that you cannot e-file your taxes due to a duplicate Social Security number issue. This means that someone else has already filed a return using your SSN.
- Unrequested Tax Transcript – Receiving an unrequested tax transcript in the mail is another warning sign of potential tax identity theft.
- Suspicious IRS Notices – There are several IRS notices that should raise the alarm, especially if you have not contacted the agency recently. These include getting notices regarding an online account that has been created in your name without your having set that up, stating that your current online account has been used or disabled without your doing so, or that you owe extra taxes or refund offset that you are unaware of.
- Suspicious Wages – If you notice IRS records showing you have earned wages or other income from a business or employer that you have never worked for, that’s another sign of tax identity theft.
- Unrequested EIN – Another warning sign is if you get assigned an EIN (Employer Identification Number) that you did not actually request.
Next Steps and Advice
If you recognize any of the warning signs above, it’s essential for you to initiate quick action to reduce further risks and work toward rectifying the situation. Ignoring these warning signs can lead to ongoing problems, financial loss, and lingering issues with the IRS.
Here are some steps to take if you find yourself in this situation:
- Respond to IRS Notices Quickly – Receiving any IRS notice can be intimidating but it’s critical that you don’t delay your response, especially if it’s related to a refund or other issues that you are unaware of. Call the phone number on the notice immediately.
- Identity Theft Affidavit – If you run into the duplicate SSN E-file issue mentioned above, you should fill out an Identity Theft Affidavit or IRS Form 14039. This form can also be used anytime you suspect that tax identity theft has been perpetrated in your name.
- Request Copy of Fake Returns – If you think a fraudulent tax return has been filed in your name, you can request a copy of the return to view it in detail.
- Talk with LibertyID – If you are a LibertyID member, contact us as soon as possible, and we will help you take all the necessary steps required to navigate the situation.
Spotting Tax Scams
In addition to your learning about the warning signs of potential tax identity theft and about the actions that you should take if you fall victim, it’s also good to know how to spot several other common tax scams.
Keep in mind that the IRS will never ask for personal or financial information over text, email, or through social media platforms. If you receive a message claiming to be the IRS through these outlets, it is a scam.
The agency will also never call taxpayers directly threatening them with arrest or a lawsuit for taxes owed. This is another common scam that threat actors use to prey on the emotional nature of tax issues. If you receive a call or message with these threats do not engage or respond.
With tax season soon in full force, and with it being an annual occurrence, keep the information in this post in mind this year and in the future so that you and your family can better identify and avoid tax identity theft issues.
LibertyID provides expert, full service, fully managed identity theft restoration to individuals, couples, extended families* and businesses. LibertyID has a 100% success rate in resolving all forms of identity fraud on behalf of our subscribers.
*LibertyID defines an extended family as: you, your spouse/partner, your parents and parents-in-law, and your children under the age of 25.