Every year, tax season presents a seasonal opportunity for criminals seeking monetary gain from identity theft. There are many ways that scammers may try to obtain personal information, but the end goal is to file a falsified tax return in the taxpayer’s name and claim a tax refund.
The scheme may not be discovered until the taxpayer attempts to file a legitimate tax return when the criminal has moved on.
Clearing up issues related to identity theft and fraudulent tax returns can be messy and significantly delay any tax refund you may be owed.
It pays to protect your identity now. Here’s how to help prevent identity theft during the tax season.
Know the Signs of Identity Theft
Understanding the signs can help you quickly recover your identity. Here are the top signs of tax identity theft.
- Receiving a letter from the IRS alerting you about a suspicious tax return you did not file.
- Receive a tax transcript in the mail that you didn’t request from the IRS.
- You get alerts from the IRS about suspicious account activity. For example, your existing online account has been hacked or disabled.
- You get an IRS notice that you owe additional tax or receive a refund for a year you did not file a tax return.
- The IRS notifies you of an employer you didn’t work for.
- You have been assigned an Employer Identification Number but didn’t request one.
Take Action if You Are a Victim
If you’re a victim of tax identity theft, then you need to take immediate action. Here are some steps to help prevent further damage.
- Contact the Federal Trade Commission (FTC) online at IdentityTheft.gov or 1-877-438-4338. The FTC will collect the details of your case.
- Contact the IRS at 800-908-4490, so they can help assist you in protecting your tax account.
- Complete an IRS Identity Theft Affidavit. Form 14039, Identity Theft Affidavit, can be found on the IRS website. You’ll have to print it, fill it out and then mail it to the IRS.
- Consider placing a freeze and fraud alert on your credit report. You’ll have to contact the three major credit bureaus, Experian®, Equifax®, and Transunion®, requesting the freeze and fraud alert. This will help protect your credit from identity thieves.
Protect Your Data and Identity
To help protect against identity theft during tax season, consider the following tips.
Secure Social Security Number.
Your Social Security card should be in a secure place at home. Never carry your SSN card in your wallet; only provide it if necessary.
Use Strong Passwords.
A strong and unique is the best way to defend your accounts and private information from identity thieves. If you need help creating a solid password, consider investing in a password manager.
Protect Against Email Spam and Computer Viruses.
Scammers typically send emails with attachments and links containing malware to steal personal information. So, if you receive an email from an unknown source demanding money or additional information, it’s likely spam, and you should delete it. As for computer viruses, consider investing in anti-virus software to better protect your computer and data.
Keep Financial Information Private.
The IRS will never call and ask for your bank or credit card account information. So, if you find yourself in this situation, hang up and report them to the IRS or the Federal Trade Commission.
Beware of Phishing.
Scammers love to impersonate IRS officials through emails. Phishing emails try to look like legit emails from an organization or company to try to steal your personal information, such as your SSN, bank account information or account logins. Typically signs of a phishing email include grammar errors, misspelled words, email addresses and domain names that don’t match. There is usually a demand or urgency to respond. Don’t respond, click links or download attachments if you encounter a phishing email. Delete it.
Shred Bank and Tax Documents.
Shredding sensitive documents can reduce your chances of an identity thief getting a hold of your documents.
Reduce Credit Card Solicitations.
Credit card offers are also considered sensitive information. So, to help protect your identity, you should also shred them. To help reduce your shredding pile, you can get off the list for pre-approved credit card offers by calling 1-888-5-OPTOUT.
Keep on Top of Data Breaches.
If a company’s data breach impacted you, contact them to see how they protect you as a client. Furthermore, contact the three major credit bureaus and place a fraud alert on your credit. If necessary, consider filling out the IRS Form 14039, Identity Theft Affidavit, mentioned previously.
File Your Taxes on Time.
File your taxes sooner than later to help reduce your risk of tax identity theft. If an identity thief manages to steal your Social Security number, you’ll play into their hands with a delayed tax return. According to the Federal Trade Commission, they received 2.8 million fraud reports from consumers in 2021, with fraud losses increasing by 70% compared to the previous year. So, consider filing those taxes as soon as possible.
Obtain an IP PIN.
Get an Identity Protect PIN from the IRS if you need extra protection this tax season. This six-digit PIN can help prevent someone from filing taxes in your name.
Know What the IRS Does and Does Not Do.
- The IRS may contact you about money owed but will never demand immediate payment. It’s important to note all payments will only go to the U.S. Treasury.
- The IRS will always contact you first by mail delivered through the U.S. Postal Service.
- The IRS will never contact you through social media or text messages.
- The IRS will only contact you via phone, email and in-person method, as a secondary option under rare instances, after sending you notice in the mail.
- The IRS will only ask for personal information after mailing a notice.
- If you are on the phone with an IRS official and need clarification on whether they are legit, consider asking for two forms of identification.
- The IRS will never accept payments through a wire transfer or gift card.
Another solution to help reduce the risk of tax identity theft is to sign up for identity theft protection. IdentityIQ identity theft protection is dedicated to protecting you. IdentityIQ services can help alert you of possible suspicious activity with real-time alerts and help you recover your identity quickly.