With the tax filing season approaching, IRS and Security Summit partners have joined forces to combat tax ID theft, a growing threat in cybersecurity.
The partnership brings together government agencies, tax industry leaders, and consumer protection organizations to address the increasingly sophisticated methods used by tax scammers to target taxpayers.
A tax ID is a unique identifier used by governments to track individuals and businesses for tax purposes. The exact form of a tax ID varies depending on the country, but it is typically a number or combination of numbers and letters.
It is important to protect your tax ID from identity theft. If your tax ID is stolen, thieves could use it to file fraudulent tax returns, open new accounts in your name, or even claim government benefits.
What is tax ID theft?
Tax ID theft or tax identity theft is a serious crime that occurs when someone steals your personal information, such as your Social Security number, name, and address, to file a fraudulent tax return and claim your refund.
Tax ID theft can have devastating financial consequences for victims, as they may be left owing taxes they don’t owe, have their wages garnished, or even be denied employment or housing opportunities.
How does tax ID theft work?
There are three main steps involved in tax ID theft:
- The thief obtains your personal information. This can happen in a number of ways, including:
- Data breaches: Data breaches occur when hackers steal personal information from businesses or organizations. This information can then be sold on the black market and used to commit tax identity theft
- Phishing scams: Phishing scams are emails or text messages that try to trick you into revealing your personal information. These scams often look like they are from legitimate organizations, such as the IRS or your bank
- Lost or stolen mail: Thieves can also steal your personal information from lost or stolen mail. This includes tax documents, W-2 forms, and other documents that contain your Social Security number
- The thief uses your information to file a fraudulent tax return. Once the thief has your personal information, they can use it to file a fraudulent tax return. This return will be filed with the IRS in your name, but it will contain the thief’s bank account information so that the refund is deposited directly into their account.
- The thief intercepts your refund. The thief will then monitor your tax account to see when your refund is issued. Once the refund is issued, they will try to withdraw the money from your account or have it mailed to a false address.
What are the signs of tax ID theft?
There are a few signs that you may be a victim of tax ID theft, including:
- You receive an IRS notice stating that you’ve already filed a tax return when you haven’t
- Your tax refund is delayed or you receive a notice that your refund has been sent to an incorrect address
- You receive IRS notices about wages or income that you didn’t earn
- You have trouble accessing your tax account online or your IRS PIN is incorrect
How do you protect yourself against tax ID theft?
To maintain vigilance over your financial well-being, regularly monitor your credit reports for any suspicious activity. Obtain free copies of your credit report from AnnualCreditReport.com to stay informed about changes or unauthorized transactions.
In order to reduce the risk of falling victim to tax ID theft in the first place, adopt preventive measures. Safeguard your personal information, including your Social Security number and birth date, by refraining from sharing it unless absolutely necessary and secure.
Exercise caution in your online activities by avoiding inputting personal information on unsecured websites. Verify the security of a website by looking for the “https://” prefix in the web address and a padlock icon in the browser bar.
Dispose of documents containing sensitive information, such as your Social Security number or bank account details, by shredding them rather than discarding them in the trash.
Lastly, consider filing your taxes early in the tax season. Doing so can make it more challenging for potential identity thieves to submit fraudulent returns in your name, offering an additional layer of protection against tax identity theft.
What if you suspect you fell victim to tax ID theft?
If you suspect that you have fallen victim to tax identity theft, it is crucial to take prompt action by following these steps. First and foremost, reach out to the IRS without delay. Report the incident to the IRS Identity Theft Protection Specialized Team by calling 1-800-908-4497.
They will guide you through the process of filing a Form 14039, Identity Theft Affidavit, a necessary step to safeguard your tax account from further misuse.
Additionally, consider placing a freeze on your credit reports. This preventive measure inhibits unauthorized individuals from opening new accounts using your identity.
Contact the three major credit bureaus:
- Experian
- Equifax
- TransUnion
to initiate a freeze on your credit reports.
Another vital step is to file a police report. Get in touch with your local police department to officially report the tax ID theft. This action can contribute to the investigation and potential prosecution of the perpetrator.
Featured image credit: jcomp/Freepik.
