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March 2, 2016

Identity Theft and the IRS

by Team Rowling
The Internal Revenue Service recently issued a warning to taxpayers: Watch out for identity theft at tax time!

A thief dressed in black and eye-masked break computer

A warning from the IRS

IRS Commissioner John Koskinen stated “We urge people to use caution when viewing emails, receiving telephone calls or getting advice on tax issues because scams can take on many sophisticated forms. Keep your personal information secure by protecting your computers and only giving out your Social Security numbers when absolutely necessary.”

A common form of tax-related identify theft occurs when a scammer uses a stolen Social Security number to file a tax return claiming a fraudulent refund. Although this issue has been on the IRS radar for years, they have not found a way to successfully prevent this from happening. Approximately 2,000 identity thieves have been convicted since 2012. Unfortunately, this represents only a fraction of the perpetrators.

How to tell if your identity has been stolen and what to do next

How can you tell when your identity has been stolen for fraudulent purposes? It’s generally discovered when your electronic filing is rejected by the IRS. Identity thieves file returns early. So, when a “second” return is filed by you, the IRS rejects it. At this point, you must file a paper return as well as follow up with the IRS to clear up the matter.

What can you do to avoid tax scams? First, never give out Social Security numbers or personal information to anyone claiming to be the IRS by phone or email. The IRS will never ask for information in this manner. Second, file your tax returns early. This will minimize the chances of a thief filing before you. Third, if you were the victim of identity theft in the past, you should apply for and utilize an ID theft PIN for e-filing. It is another line of defense.

It’s true that nothing is foolproof in preventing tax identity fraud. However, armed with information, you can go a long way toward minimizing the risk.

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