In 2015, tax- or wage-related fraud represented 45.3% of identity theft, according to the Federal Trade Commission’s Consumer Sentinel Network.* In the same year, the IRS stopped 1.4 million confirmed ID theft returns, protecting $8.7 billion in what would have been fraudulent refunds. In the past couple of years, more than 2,000 people have been convicted of filing fraudulent ID theft returns. The IRS is working harder than ever to stop identity theft, joining with states and the tax industry in an initiative called ‘Taxes. Security. Together.’
Tax-related identity theft happens when someone uses your Social Security number to file a tax return and claim a fraudulent refund. You’ll never see many of the steps that the IRS is taking to verify identity and tax return validity. But there are four things you can do to keep your personal information safe:
- Keep your Social Security Card at home, not in your wallet or purse. Only provide your Social Security number (SSN) if it’s absolutely necessary. Just because a form asks for your SSN, doesn’t mean that you have to fill in the blank.
- Protect your computers. Use anti-spam and anti-virus software, and keep the software updated. Create strong passwords and make a note to periodically change passwords for Internet accounts. Encrypt sensitive files, such as tax records.
- Beware of scams. Learn to recognize and avoid emails or text messages that look like they’re from your bank, credit card company, or IRS – but aren’t. One clue is to look at the ‘from’ address on the email message. Be very cautious before clicking through on emails that look like they’re from your financial institutions. The IRS will never call you to threaten a lawsuit, arrest or to demand an immediate tax payment. Normal correspondence is a letter in the mail. The IRS uses postal mail to verify identity by asking you to call a specific number or visit a Taxpayer Assistance Center.
- Pay attention to your mail. Collect mail daily, and put a vacation hold on mail delivery when you go out of town. If you notice that a bill or financial statement is late, contact the issuer. Shred credit card offers and other documents that connect your name and address. Criminals use information to create false accounts.
- Check your credit. Request a credit report annually and make sure that the accounts listed are ones that you know about.
If you suspect or know of an individual or business that is committing tax fraud, you can visit IRS.gov and follow the instructions on How to Report Suspected Tax Fraud Activity. If you are a victim of identity theft, the FTC has a resource for reporting and recovering from identity theft. Also, please notify your Salmon Sims Thomas tax advisor.