Tax Identity Theft

Tax Identity Theft
Eileen St. Pierre, The Everyday Financial Planner

identity_theft_smJust about all of us either have had some form of our identity stolen or know a victim. Perhaps the worst form is tax identity theft, when someone steals your Social Security number (SSN) and files a return claiming your refund. It’s becoming so prevalent that the IRS has a process for clearing it up and getting the refund you deserve. The 2015 tax filing season begins on January 19 so file early to get ahead of thieves.

According to the IRS Taxpayer Guide to Identity Theft, follow these steps:

Step 1 – Report your stolen SSN.

File a complaint with the Federal Trade Commission (FTC) at www.ftccomplaintassistant.gov. You will receive a FTC Identity Theft Affidavit. If the identity theft is rampant, you also need to file a police report. If so, go to your local police department.

Contact one of the three credit bureaus to place a fraud alert on your account:

  1. www.Equifax.com (1-888-766-0008)
  2. www.Experian.com (1-888-397-3742)
  3. www.TransUnion.com (1-800-680-7289)

You only need to contact one of these companies. They are required to let the other two know. A fraud alert is free and will not hurt your credit score.

Step 2 – Report the theft to the IRS.

You will receive a notice in the mail from the IRS telling you that your return has already been filed. Respond immediately, following the instructions in the notice. File IRS Form 14039 Identity Theft Affidavit.

  • The IRS will always mail you the notice. If you get a phone call or email from someone claiming to be from the IRS, it is fraudulent. Do not give out any personal information.
  • Report suspicious online or emailed phishing scams to:phishing@irs.gov. For phishing scams by phone, fax or mail, call: 1-800-366-4484. Report IRS impersonation scams to the Treasury Inspector General for Tax Administration’s IRS Impersonation Scams Reporting.
  • You will probably have to file a paper return and attach Form 14039 along with any other documentation.
  • If you previously contacted the IRS and did not have a resolution, contact the Identity Protection Specialized Unit at 1-800-908-4490.

Step 3 – Clean up your credit report.

Close any accounts that were opened without your permission. Remove bogus charges from your accounts. Correct your credit report.

  • Go to www.annualcreditreport.com to get your credit report.
  • Follow the instructions from each of the three credit reporting bureaus to get fraudulent entries removed.
  • This is when it’s important to have that FTC Identity Theft Affidavit and the police report. Include copies of these with your correspondence.
  • Send everything via certified mail.

You may want to consider adding an extending fraud alert or freezing your credit. Neither will hurt your credit score. You may need to pay a small fee both to (1) freeze and (2) unfreeze your credit – rules vary by state.

Step 4 – Take steps to avoid tax identity theft in the future.

  • Secure your SSN. Don’t give it to a business unless it is absolutely necessary.
  • Don’t give personal information over the phone, through the mail or the Internet unless you have either initiated the contact or are sure you know who is asking.
  • Store personal information in a safe place at home and work.
  • Install firewalls and virus protection software on home computer.
  • Create strong computer passwords.
  • Check your Social Security statement annually.
  • Check your credit report annually at www.annualcreditreport.com

Listen to my Identity Theft webinar for more information.