IRS and Identity Theft

 

Very few people like dealing with the IRS if they don’t have to. One particular time we welcome this contact is when we are filing our tax returns, expecting a large refund. Unfortunately, an increasing number of taxpayers in the electronic-filing era are getting shocking news each year: that their tax refund has been stolen by an identity thief.

How Does Identity Theft Work?

Identity theft occurs in the context of taxes when a person (or group of people): (1) steals a person’s social security number; (2) uses that number to generate a fake W-2 form and tax return in that person’s name; and (3) steals that person’s tax refund.

The obvious question is: how do the thieves get people’s social security numbers? There are a lot of ways that a person’s social security number is stolen. Many places may have your social security number contained in physical or digital form; this can include your employer, government offices, car dealerships, colleges, financial institutions, hospitals, and medical offices. Thieves can illicitly gain access to this information through hacking, downloading files, or copying the physical file. In addition, thieves are increasingly using “phishing” schemes in which they trick you, or someone who has access to your information, into giving them the information. Examples of this are fake callers purporting to be from the IRS, asking you to confirm your social security number over the telephone or by email.

In the era of electronic tax filings, identity theft has become a constantly evolving problem for the IRS. Tamara Powell, an acting director for the IRS’ Small Business/Self-Employed Division, told Business Management Daily that there are “sophisticated criminal syndicates” who sell stolen information. Last year alone, the IRS stopped “a little under a million phony returns”.

How Do I Protect My Identity?

Identity theft can take months for the IRS to resolve, and the resolution isn’t always a good one. For this reason, it is important to put some safeguards in place. This includes:

  • If someone calls or emails you and says they need your social security number or Tax-ID number for some official purpose, do not provide them with this information.
  • Password protect your phone, tablet, and computer, and make sure you have updated firewall protection.
  • Identify and limit the places in your home or office where your social security number physically appears. Secure any documents containing that information.
  • Encrypt any digital document that has your social security number.
  • Regularly review your credit reports and take action if there is suspicious activity.

Identity theft is something to take very seriously, especially when it comes to stolen tax refunds. If this happens to you, the IRS has a process to review allegations of identity theft. I can help you through this process. I have more than twenty years of experience in tax law and have helped many clients resolve IRS tax issues of all levels of complexity. Call the Law Offices of Robert S. Thomas today at 847-392-5893 to schedule an initial consultation or visit our website.

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