Most people understand what identity theft is, and many people have either experienced it firsthand or at least know someone who has gone through it. What you may not be aware of is that identity theft isn’t just confined to your bank accounts or credit cards.
Tax-return fraud is on the raise, according to federal authorities. This means you face a greater risk that someone will try to filed a fraudulent tax return with your name and social security number. When you file your actual return, you may discover some time later that someone has actually already file one, and possibly already collected your refund.
It’s not surprising that this theft is on the rise. Consumers often don’t safeguard their social security numbers, and the IRS is not in a position where they can prevent such a thing from happening. The IRS processed about 145 million returns for the 2011 tax year. As of May 2012, it had pulled 2.6 million returns for possible identity theft, with 1.5 million documented cases, representing theft of more than $5 billion. According to the Wall Street Journal, the National Taxpayer Advocate, an IRS watchdog group, has seen its identity theft caseload increase by 650 percent since 2008.
If your identity was, in fact, stolen, you will need to file a police report with the authentic tax return, along with IRS Form 14039 (Identity Theft Affidavit). The IRS will then issue a PIN to authenticate future tax returns.
Here are some tips provided by the National Ethics Association that you can follow to safeguard your information.
1. Never click on an email coming from the IRS, even though it may look legitimate. And never provide any personal information in response to such emails.
2. Make sure all financial services documents mask social security numbers whenever possible. The goal: to assure that SSNs are closely protected and invisible to potential scammers.
3. Sign up for credit-bureau monitoring from each of the three credit agencies.
4. Never ignore an IRS notice, especially one requesting additional data. Such correspondence often indicates unauthorized use of your identity and account.
5. Always store social security cards in a safe, secure location.
6. Never discard documents with SSN’s without shredding them.
7. Resist company requests to provide SSNs unless totally necessary.
8. Store sensitive financial documents in a locked file cabinet or safe.
9. Use firewalls and anti-spam or anti-virus software to protect information on personal computers. And always install software updates that patch security vulnerabilities.
10. Call Wolf Tax & Financial Group whenever you have a tax- or investment-related question.
OK . . . that last one I just put in myself, but I think you get the point. Identity theft, in general, is very common and identity theft with your tax refunds is definitely on the rise, so stay informed and remain cautious when it comes to your social security information.