Financial Fundamentals Blog

What is tax-related identity theft?

In 2018, the Internal Revenue Service (IRS) reported that tax-related identity theft is on the decline. Even though its numbers are dropping, you should still be aware of it. With tax time rapidly approaching, let’s look at its signs and what you can do to protect yourself.

What is it?
Tax-related identity theft can happen in two ways:

  • An individual will use your Social Security Number (SSN) to file a false tax return in order to claim your refund.
  • An individual will use your SSN to complete paperwork in order to secure a job.

What are the signs?
If someone has used your SSN to file a false tax return before you have filed your own tax return, the IRS will assume that your taxes have already been completed. When you do file, the IRS will match your SSN, and you will be flagged for having filed more than one tax return. The IRS will notify you that a tax return has already been filed for you. Please note that the IRS will NOT make initial contact with you via phone, social media or email.

If someone has used your SSN to secure a job, chances are that the employer will report the fraudster’s wages as your income. When it’s time to files your taxes, the IRS will notify you that you have failed to report your total income. You might also receive collections notices from previous years for not claiming full income. Either notice is a result of the IRS having no knowledge that your SSN was fraudulently used to secure a job. In this scenario you might also receive information from an employer that is not yours and did not employ you previously.

How to protect yourself from tax-related identity theft
You can protect yourself from identity theft by using several measures. For the prevention of tax-related identity theft, the IRS recommends the following:

  • Always use security software with a firewall and anti-virus protection on your PC.
  • Regularly run anti-virus and anti-spyware programs on your PC.
  • Keep strong passwords in play, especially on tax software and financial accounts.
  • Be mindful that emails and texts could be phishing attempts and you SHOULD NOT click on links or download documents from unknown sources.
  • Keep your Social Security card in a safe place, and only carry it with you if you need it for a specific purpose. Carrying it regularly compromises its safety and increases the risk of misplacement.

What to do if you are a victim
Sometimes you can take every step to protect yourself and identity theft still happens. If you are a victim, the IRS strongly recommends that you respond to any IRS notice immediately by calling the number provided on the notice. If you find that your e-filed return is rejected because another person has filed under your SSN, the IRS also requests that you complete the Identity Theft Affidavit Form 14039, which is specifically for victims of SSN theft.

You can take additional steps for extra safety, including changing your PINs and passwords, placing a credit freeze or fraud alert on your account, regularly reviewing your free credit report in detail and reporting your SSN theft to both the FTC and local authorities.

If you have a 7 17 Benefits Plus checking account, you have access to Restoration Rescue, a complimentary Identity Theft Restoration Service. Restoration Rescue can provide licensed attorneys specializing in identity theft restoration. With this program, when you grant a limited power of attorney, lawyers will work on your behalf to help recover your identity and loss of funds, assist in filing a police report, and contact all credit bureaus, creditors, financial institutions and more.