Protect yourself from tax identity theft
People often don’t know they’re a victim until they file or get a notice from the IRS
Two St. Louis men were sentenced to lengthy prison terms for filing more than 2,000 tax returns in other people’s names claiming over $12 million in fraudulent refunds. The IRS paid out almost $900,000. Victims included school district employees in Alabama and Mississippi whose information was stolen in a data breach at a payroll company.
A Tennessee woman was convicted of aggravated identity theft for filing fraudulent tax returns in the names of prisoners held at the Alabama Department of Corrections, as well as others. She netted $700,000.
These are examples of the most common form of tax identity theft in which a victim’s Social Security Number or Individual Taxpayer Identification Number is used to file a tax return claiming a fraudulent refund that’s sent to the crook. Another kind involves the thief using a person’s SSN to get a job. People often don’t find out they’re a victim of tax identity theft until they file their own tax return or get a notice from the IRS about a problem.
The IRS has warned about a more novel kind of tax identity theft
The con artist steals a person’s SSN or Individual Taxpayer Identification Number and bank account information, files a bogus return, and has the refund deposited to the person’s account. Then he calls the person posing as an IRS employee, says the deposit was an error, tells the victim he must return the money immediately to avoid penalties and interest, and demands payment using gift cards. You might hope the method of payment would alert the victim it’s a scam, but people still fall for it.
The good news is that in the past few years the number of tax identity theft cases has dropped dramatically due in large part to the efforts of the Security Summit, a partnership between the IRS, state tax agencies, and the tax preparation industry. The bad news is the crooks are becoming more sophisticated and tax identity theft remains enough of a problem to make the IRS’ annual “Dirty Dozen” list of tax scams.
These are signs that you may be a victim of tax identity theft:
● You get a letter from the IRS inquiring about a suspicious tax return that you didn’t file.
● You can’t e-file your tax return because of a duplicate Social Security number.
● You get a tax transcript in the mail that you did not request.
h You get an IRS notice that an online account has been created in your name.
● You get an IRS notice that your existing online account has been accessed or disabled when you took no action.
● You get an IRS notice that you owe additional tax or refund offset, or that you have had collection actions taken against you for a year you didn’t file a tax return.
● IRS records indicate you received wages or other income from an employer you didn’t work for.
If you get a letter — email, text, social media message or threatening phone call is a scam — from the IRS about possible tax identity theft, respond immediately and follow the instructions.
And the earlier you file your own tax return, the less opportunity crooks will have to file a fraudulent one in your name.
Randy Hutchinson is the president of the Better Business Bureau of the MidSouth. Reach the BBB at 800-222-8754.