TaxProfessionals.com
Posted by James Financial Services Inc

How to Protect Yourself Against Tax Identity Theft

How to Protect Yourself Against Tax Identity Theft

Filing income tax is not a lot of fun. But did you find out that a scammer filed a tax return on your behalf to steal your refund? It makes Tax Day even less of a threat.

Fortunately, you can protect yourself and business against tax identity theft, a crime in which crooks use your personal information, including your SSN, to file a tax return on your behalf. The goal of these crooks is to steal your tax refund.

This is a serious crime that could be a sign of other problems in the future. What if criminals had enough personal information to file a fraudulent tax return on your behalf? They may also have enough to open credit cards or loan accounts on your behalf. They can log into your online bank accounts or credit card portals.

Tax Identity Theft is such a large program that the Federal Trade Commission hosts a Tax Identity Theft Awareness Week each year, starting in the last month of January. In 2022, the week will begin on January 31. During the week, the FTC hosts several webinars that offer consumers tips on identifying and preventing tax identity theft.

Luckily, you can take proactive steps to protect yourself against tax identity theft. This includes using an IRS tool, the Personal Information Protection Number, better known as an IP PIN, to reduce the risk of this type of identity theft.

Here are some steps you can take to prevent tax identity theft.


Watch out for signs that you are a victim.

The sooner you find out that you have been the victim of tax identity theft, the sooner you can take steps to minimize the damage.

The most obvious sign of trouble? You try to file your tax return electronically only to receive a message from the IRS that someone has already filed the tax return on your behalf using your social security number. This is a sure sign that you have been the victim of tax identity theft.

The same can happen if you fill out an income tax return. If the IRS returns a letter informing you that it already has a return in your name, that's also a sign of identity theft.

These are the two most obvious signs of tax identity theft. You should be careful when you receive a notification from the IRS that you have created a new online account at IRS.gov, knowing that you have never taken this step. This is another sign that someone is using your personal information.

Ensure to watch out for these signs of tax identity theft. What if you receive a letter or notification from the IRS that someone has filed a refund on your behalf? Don't ignore it. This is a problem that may never go away.


Report identity theft immediately.

Once you know that you have been the victim of tax identity theft, immediately complete IRS Form 14039 Identity Theft Return Form. This is the form used by taxpayers to report fraudulent returns to the IRS.

You can complete the form on IRS.gov, print it, and attach it to your printed tax return. Submit your form and return it to the IRS, following the instructions on the form.

If you want to see what your false income tax return looks like, and you may find this information useful, you can request a copy of the false income tax return from the IRS. Visit the IRS How to Handle Fraudulent Returns page for more information on how to request a copy.

It also makes sense to report this crime to the Federal Trade Commission (FTC). Another essential step to take is to contact the three national credit bureaus: Experian, Equifax, and TransUnion. These agencies can place a fraud alert on your credit reports.

You can also consider a credit freeze on all three branches. When your credit is frozen, creditors, credit card providers, and other financial institutions cannot withdraw your credit without your permission. This means that scammers cannot get new loans or open credit card accounts on your behalf without the agencies contacting you first. It's a good way to slow down the activities of the scammer.


Check your other accounts.

After reporting the identity theft to the IRS and credit bureaus, study your bank accounts and credit cards online. The same offender who used your personal information to file a tax return on your behalf can also use it to access your online credit card portal and online bank accounts. Look for any suspicious withdrawals or charges on these accounts.

When you do this, you might want to verify that your bank or credit card provides alerts whenever you access your account or that you can set up two-factor authentication for an added level of protection.

If you find any suspicious debits, notify your bank and credit card companies. You can close your accounts to protect you from future suspicious activity. The sooner you report taxes or fraudulent transactions, the more likely you are not to pay them.

Review these accounts daily. Contact your credit card issuer and bank immediately if you notice suspicious activity.

You should also request copies of the three credit reports, each managed by the national credit bureaus Experian, Equifax, and TransUnion. You can request each of these reports free of charge once a year during normal business hours. However, during the COVID-19 pandemic, credit reporting agencies allow consumers to request their credit reports for free once a week.

After requesting the reports, review them carefully. They will list any credit or loan accounts opened in your name. If you see one that you can't remember, it could be a sign that someone has used your personal information to get loans or open credit cards on your behalf.


Get an IP PIN code

Another important tool that you can use to combat identity theft for tax purposes is a personal identification number for identity protection, better known as an IP PIN code.

An IP PIN is a six-digit number assigned by the IRS. When you file your tax return, you will also provide your IRS with your IP PIN code.

There are two advantages: First, the IRS can use this number to verify that you are completing the return correctly. Second, your IP PIN code also makes it harder for criminals to file a tax return on your behalf. Identity thieves will now need to know more than their name, social security number, and address to make such a claim. You must also know your IP PIN code.

To obtain an IP PIN, you must first create an account online at IRS.gov. Once you have done that, you can visit the Get an IPN tool to request and obtain your IP PIN.

To register and obtain your number, you will need your email address, social security number or individual tax identification number (ITIN), tax filing marital status, postal address, and a linked financial account number in your Name. This number can consist of the last eight digits of your credit card, mortgage or loan number, car loan account number, or home equity line of credit.

Obtaining an IP PIN code is even easier (in fact, automatic) if you have been the victim of identity theft. If you are a victim of identity theft, the IRS will send you a CP01A alert with a new IP PIN each year. This process will be automatic. If you have created an IRS account, you will also be able to view your CP01A Notice online.

Otherwise, your IP PIN code will remain valid for one calendar year, after which you will need to create a new one. It might seem like a daunting task, but tax identity theft is definitely worth avoiding.


Pay attention to your personal information.

You must protect your personal information at all costs.

This means not sending your social security number(SSN), address, date of birth, or other personal information in response to emails from strangers. Criminals are often involved in phishing scams to obtain this information. They may send you an email that appears to be from your bank or credit card company, asking you to verify your account. To do this, they need your SSN, account number, or some other form of identification. Obviously, this is only a trick to steal this information.

Or the scammers send an email from what appears to be your bank informing you that they will close your checking account if you don't click on a link. You are taken to a different website that asks for your account number, name, address, and social security number when you click on the link. Once you provide this information, scammers will have everything they need to access your financial accounts online, get loans in your name, and, yes, file a fraudulent tax return.

Remember, companies will never ask you for confidential personal or financial information over email. If you receive an email asking for it, it is a scammer. Please delete this email immediately. And ensure not to click on any of the links you see in your mail.


Don't Let Your Guard Down.

Identity theft is not only an invasion of your privacy; it is also a nuisance. If you are the victim of this violation, you will need to cancel and replace your credit cards, monitor your bank accounts, and review your credit reports to ensure no one has borrowed or opened credit card accounts on your behalf.

The bad news? The offenders who commit these crimes show no signs of slowing down.

This is why it is so important to be careful. If you are having trouble filling your tax return online, or if you receive a letter from the IRS letting you know someone has already filed a tax return for you, don't delay. Immediately contact the IRS, your bank, the credit card companies, and the three national credit bureaus Equifax, Experian, and TransUnion. The sooner you take action, the sooner you can recover from identity theft.


FOR MORE INFORMATION ON HOW JAMES FINANCIAL SERVICES, INC. CAN BEST HELP YOU WITH YOUR TAX FILING NEEDS, PLEASE CLICK THE BLUE TAB ON THIS PAGE.


THANKS FOR VISITING.

James Financial Services Inc
Contact Member