Marcum LLP
2017 Year-End Tax Guide

 

Identity Theft: The Threat and What to Do About It

Identity Theft: The Threat and What to Do About It
 

Data breaches seem to be in the news every day. How do businesses and individuals identify suspicious activity?

Data breaches and identity thefts are becoming more frequent, despite the availability of resources to protect individuals and businesses from improper disclosure of personal information. One common example is theft of a taxpayer's social security number, for the purposes of filing a tax return in the taxpayer's name and laying claim to a fraudulent refund. Most taxpayers discover such tax identity theft after the fact, when they try to file their own tax return or when they receive a letter from the IRS notifying them of suspicious activity.

Taxpayers should be aware of spear- phishing emails that seem to come from familiar sources, but are actually a ruse to obtain confidential passwords or install malware on the target's computer. Never open a link or attachment unless you can confirm the authenticity of the sender. Once a bad attachment is opened or the link is accessed, your personal data is at risk.

Identity thieves are also known to phone targeted individuals and businesses, posing as IRS representatives. They may threaten arrest or deportation if a certain amount is not paid, or they may ask for information needed to release a tax refund. The IRS will never phone, email or text taxpayers for such purposes. Do not respond if you are receive a communication from someone purporting to represent the IRS.

The IRS provides important tips to help taxpayers protect their personal information, including Social Security Numbers. The IRS encourages individuals to never carry a Social Security card in a wallet, or any other documents that reflect a Social Security Number. Only share your Social Security Number when necessary, and monitor credit reports and Social Security Administration earnings statements regularly to check for accuracy.

Another way to be proactive to protect against identity theft issues is to check tax records of past tax returns by requesting transcript reports from the IRS for multiple years to ensure no one else filed a return in your name.

In case of identity theft, taxpayers can report the crime to the local police and file a complaint with the Federal Trade Commission at www.identitytheft.gov or by calling the FTC Identity Theft Hotline at 1- 877-438-4338. Form 14039, Identity Theft Affidavit, should also be mailed or faxed to the IRS. The taxing authority will flag the taxpayer's account for fraudulent activity. Taxpayers can also request fraud alerts from a credit reporting agency, or request a credit freeze, which will stop any new accounts from being opened in the taxpayer's name
until the account is unlocked. Any accounts that are opened fraudulently should be closed and reported.

Taxpayers should continue paying taxes and filing tax returns. For a limited period of time, annual tax returns should be filed in a paper format instead of by e-filing. If resolution is not obtained, a taxpayer can also contact the Identity Protection Specialist Unit at 1-800-908-4490.



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