Are You at Risk of Being a Tax Identity Theft Target?

March is a really busy time of year for most people. This year you have March Madness, Presidential Primaries, my 40th birthday, and tax season hits full swing. Not only you and I are really busy but the scammers and criminals are exceptionally busy. With April 15th fast approaching the tax related identity thieves are out in full force.

Tax season is underway and that means an uptick in tax-related scams. One particularly pernicious form of fraud is tax identity theft. Tax-related identity theft happens when someone uses sensitive personal information (like your Social Security number) and files a fraudulent tax return in your name to collect a refund. According to recent statistics, scammers filed over 5 million returns in 2013 using stolen information, costing the IRS $5.8 billion in fraudulent refunds. (Source: Wall Street Journal)

In the last 3 years alone I have had it happen to 5 clients. Amazingly it doesn’t matter if you are getting a refund or not. The thieves are just hoping that enough slip through the cracks to enrich themselves at the tax payer’s expense. If you are a victim it can be quite time consuming to resolve the issue, but thankfully the IRS has invested heavily in technology and is getting much better at detecting fraudulent tax returns.

Unfortunately, filing a false tax return isn’t difficult. All you need is a name, Social Security number (SSN), and date of birth (usually stolen from sources outside the IRS). Most victims don’t realize anything is amiss until they file their taxes and receive notification that a return has already been filed in their name. So what can you do to protect yourself from identity theft?

IRS notices will always arrive by mail, and anyone demanding immediate payment over the phone is a scammer. If you receive an unsolicited call and think you might owe federal taxes, hang up and call the IRS directly at 1-800-829-1040.

Be careful about giving out your SSN since it is the most commonly used piece of data to commit identity theft.Follow smart computer practices like creating strong, unique passwords for each account and website you use. Purchase anti-virus and firewall software for your computer and install regular updates.
Regularly shred documents like bills and financial statements, insurance statements, expired credit cards, and any other paperwork that contains account numbers or personal information. If you don’t have access to a shredder, please feel free to utilize our shredding service here at the office.
Common sense doesn’t go out of style. When it comes to your personal and financial security, “an ounce of prevention really is worth a pound of cure.”

Be careful and stay smart and safe.