Our experienced accountants at Malloy, Montague, Karnowski, Radosevich & Co., P.A. provide tax filing preparation services to help businesses/individuals reduce taxes and maximize refunds. But unfortunately, every year, the Internal Revenue Service pays out billions in refunds to identity thieves who file fake returns. It’s the #1 fraud according to the IRS.
How does the scam work? What can you do to minimize the risk of it in the first place? And if you’re a victim, what can you do to recover?
The scam consists of identity thieves taking legitimate taxpayers’ Social Security numbers and filing false tax returns to divert refund checks. They often strike early in the tax season, filing returns before their victims. Taxpayers often do not discover they are victims of identity theft until attempting, unsuccessfully, to file their own tax returns online.
However, there are some preemptive strategies for preventing taxpayer identity theft.
First, protect your social security number (and other similarly sensitive financial information) by providing it only when verifying the source of the request as legitimate. Be particularly cautious about any telephone callers requesting your social security number. Also, transmit your number through your own secured, password-protected accounts.
Second, regularly check your credit report because it may signal suspicious activity before the tax scam hatches.
Third, filing your taxes early is an excellent way to prevent taxpayer identity theft because the IRS allows only one tax return for each Social Security number per year.
But what are your options if you’re a victim of identity theft? According to the IRS:
- respond immediately to any IRS notice;
- if your e-filed return is rejected because of a duplicate filing under your Social Security number, or if the IRS instructs you to do so, complete IRS Form 14039, Identity Theft Affidavit (PDF); and
- visit identitytheft.gov for steps to protect yourself and your financial accounts.
Take-away: Taxpayer identity theft strikes many thousands of unsuspecting people. Filing your tax return as early as possible is one very effective way to guarding against identity theft. At MMKR, we can timely prepare your return and file it promptly to minimize the risk of identity theft and to help expedite refunds. Call us today for an appointment.
Sources:
“Taxpayer Guide to Identity Theft,” IRS Online Publication (February 18, 2020).
“IRS Introduces New Tool in The Fight Against Identity Theft,” Forbes Online Publications (February 6, 2020).
“11 Tips to Protect You From Identity Theft & Related Tax Fraud,” Forbes Online Publications (January 24, 2016).
