Taxpayer Identity Theft: Avoid Becoming a Victim
Each year, millions of consumers have their identities stolen. Simple everyday transactions, such as applying for a credit card, writing a check, or using a credit card online or in a store provide opportunities for identity theft. While we often hear of bank and credit card fraud as results of identity theft, taxpayer identity theft is unfortunately becoming more prevalent.
What is Taxpayer Identity Theft? Typically, an identity thief uses a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund. This is often done early in the filing season, as the thief is trying to gain access to your prepaid tax dollars before you can file a return. You will generally be unaware that this has happened until you file your return later in the season and discover two returns have been filed using the same social security number. If you electronically file your tax return, or have it electronically filed by a tax preparer, you will know within hours if this has occurred, as your return will be rejected and the reason will be duplication of social security numbers.
How does identity theft happen? Thieves use both high-tech and simple methods to steal identities. Some methods include:
- Phishing – The act of sending an e-mail to a user and falsely claiming to be a legitimate company or organization in an attempt to trick the user into providing private information. The e-mail may also lead victims to false websites that are used for identity theft.
- Trojans and spyware – These are programs that can attach to your computer when downloading software from the internet or when clicking on a link from a malicious e-mail.
- Dumpster diving – Thieves sort through garbage cans looking for personal information.
- Stealing your wallets or purses containing identification cards, credit cards and bank information.
- Taking personal information you share or post on the Internet.
- Completing a “change of address” form to redirect your mail.
How can we prevent identity theft? While it is impossible to eliminate the possibility of becoming a victim, we can take steps to minimize the chances. Some steps include:
- Do not carry your social security number or card in your wallet or purse.
- Don’t give your social security number to a business or anyone else just because they ask; always challenge the request.
- Protect financial information in your purse or wallet while at work.
- Check your credit report every 12 months. Every U.S. resident can get one free report from each of the three major credit reporting bureaus per year.
- Shred bills or other documents that provide personal information.
- Password protect personal documents when sending through e-mail.
- Use a password on your smartphone.
If you believe you’re a victim of identity theft
- If you have not yet received an IRS notice, contact the IRS Identity Protection Specialized Unit at
800-908-4490 immediately so that they can take steps to secure your tax account and match your social security number.
- If you receive a notice from the IRS that indicates fraudulent activity, respond immediately to the number on the notice.
- Fill out Form 13049, Identity Theft Affidavit. This affidavit requires that you also file a report with the local police and obtain a copy of the report for your records.
- Report incidents of identity theft to the Federal Trade Commission at www.ftc.gov/idtheftor the FTC Identity Theft Hotline at 877-438-4338.
- Contact the fraud departments of the three major credit bureaus
o Equifax – 800-525-6285
o Experian – 888-397-3742
o TransUnion – 800-680-7289
- Report misuse of your Social Security number to the Social Security Administration
Be vigilant! The IRS does not initiate contact with taxpayers by email, telephone or social media tools to request personal or financial information. The Chicagoland area in particular has reported a large uptake in fake IRS calls and emails. Remember to always guard your personal information and trust your instincts.
We hope this information is helpful. If you’d like to discuss this information, or feel you have been a victim of identity theft and would like our assistance in working with the IRS, please contact Karen Snodgrass or Deanna Salo from Cray, Kaiser Ltd. (630-953-4900), a strategic partner with the Chicago Family Business Council.
Karen Snodgrass CPA
Cray, Kaiser Ltd.
1901 S. Meyers Road
Oakbrook Terrace, IL 60181
Phone: (630) 953-4900 x248
Fax: (630) 953-4905
Deanna L. Salo CPA
Cray, Kaiser Ltd
1901 S. Meyers Road
Oakbrok Terrace, IL 60181
Phone: (630) 953-4900 X210
Fax: (630) 953-4905