Identity Theft and Your Tax Return

We hear about and worry about identity theft almost every day it seems.  Did you know that identity thieves may be using your name, address and social security number to file false tax returns to claim refunds?  We have had clients who have fallen victim to this unfortunate situation.  Imagine e-filing a tax return and having that return rejected because the IRS claims that you have already filed a return.  Someone with your information can create a bogus W-2 with false withholdings, file the return, get the refund and disappear before you file your actual return.

The IRS knows this is a huge problem.  Recently, Danny Werfel, Principal Deputy Commission for the IRS in an address in Dallas, Texas, said,

“More than 3,000 IRS employees are currently working on identity theft – more than double the number at the start of the previous filing season. We have also trained 35,000 employees who work with taxpayers to recognize identity theft and help victims. So far this calendar year, the IRS has worked with victims to resolve more than 565,000 cases. This is more than three times the number of identity theft victim cases that we had resolved at the same time last year. We realize, though that case resolution often takes too long, and we continue to strive to reduce the time that it takes to close cases.

We have also expanded our fraud detection efforts. We have increased the number and quality of our identity theft screening filters, and we have suspended or rejected more than 4.6 million suspicious returns so far this calendar year. The number of identity theft investigations by our Criminal Investigation division continues to rise, with more than 1,100 investigations opened so far in FY 2013.”

These are the IRS' top tips to help you avoid becoming the victim of an identity thief.

Ø  The IRS does not initiate contact with taxpayers by email or social media tools to request personal or financial information. The IRS does not send emails stating you are being electronically audited or that you are getting a refund. This includes any type of electronic communication, such as text messages and social media channels.

Ø  If you receive a scam email claiming to be from the IRS, forward it to the IRS at phishing@irs.gov.

Ø  Identity thieves access your personal information by many different means, including:

·         Stealing your wallet or purse

·         Posing as someone who needs information about you through a phone call or email

·         Looking through your trash for personal information

·         Accessing information you provide to an unsecured Internet site.

Ø  If your SSN is stolen, another individual may use it to get a job. That person's employer may report income earned by them to the IRS using your SSN, thus making it appear you did not report all of your income on your tax return.

When this occurs, you should contact the IRS to show the income is not yours. After the IRS authenticates who you are, your tax record will be updated to reflect only your information. The IRS will use this information to minimize future occurrences.

Ø  Your identity may have been stolen if a letter from the IRS indicates more than one tax return was filed for you or the letter states you received wages from an employer you don't know. If you receive such a letter from the IRS, leading you to believe your identity has been stolen, respond immediately to the name, address or phone number on the IRS notice. If you believe the notice is not from the IRS, contact the IRS to determine if the letter is a legitimate IRS notice.

Ø  For more information about identity theft, including information about how to report identity theft, phishing and related fraudulent activity, visit the IRS Identity Theft Protection page, which you can find by searching identity theft on the IRS.gov home page.

Should you become a victim of identity theft which involves filing of false tax returns, please contact us at Mantyla McReynolds as soon as possible.  We know the procedures and the forms that need to be filed to resolve this problem.