Identity theft is an increasingly common problem around the globe. If you’re affected it can mean someone else might be using your personal and financial data, without your permission, for their own motives. This can frequently involve applying for credit cards or removing funds from your bank account. However, another area where identity theft can happen is in relation to your tax affairs.
If criminals gain access to your Social Security number and other personal details it’s likely they’ll use the information for unscrupulous reasons. One of the most common examples of this is by filing a fraudulent tax return, which uses your Social Security number and associated personal data to file a fake return and subsequently pocket the money that would normally be returned to you.
This can have all sorts of other ramifications too, which can be a bit of a nightmare to put straight. However, because tax identity theft has become such a problem the IRS has pretty good measures in place to help you if it happens. Nevertheless, while the revenue service might spot that there is fraudulent activity taking place around your Social Security account, you can also do plenty to protect yourself too.
Spotting the signs
We all need to be that little bit more vigilant about cybercrime now that so many of us are online, especially now that so many of use e-file our tax returns. One of the most obvious indicators you’ve been the victim if tax identity theft is if you electronically file your return and it gets rejected by the IRS because some has already filed using your name and Social Security Number.
Even if you’re still filing your tax return by mail you can be subject to the same issue and the IRS will write to you stating that it already has a return in your name. This also means that criminals have used your name and Social Security number, usually in the hope of securing your tax refund.
Another indicator of criminal activity in relation to your account can include the IRS informing you of a new online account being created in your name on the revenue website.
While anyone can be a victim of tax-related identity theft there are several basic things you can do in order to minimise this ever-present threat. Most of these measures revolve around using some common sense when it comes to protecting your personal information. For example, make sure that you don’t share your Social Security number, address, birthdate or anything else that relates to yourself or your tax affairs if you don’t need to.
It may sound obvious but plenty of people still get caught out every year by sharing their details in response to emails and phone calls. Criminals frequently use bogus emails to make phishing attempts and get your details using what may look to be a legitimate contact. This might even come from a source that you think seems to be okay, but phishing emails often have tell-tale signs that they are not genuine. It’s far better not to respond before you’ve made more detailed checks, rather than providing information quickly and then regretting it later.
A classic example of the phishing email is when criminals send you a message that purports to be from your bank. In many cases they’ll be hoping you click on a link within the message and supply your personal details, which may include your name, address, an account number and also your Social Security number. However, banks and other institutions will never ask you to do this, so the best thing to do with emails like this is delete them right away.
One way to help keep your tax affairs better protected, particularly if your account has been compromised before is to get an Identity Protection Personal Identification Number or IP PIN. This is a really useful option offered by the IRS that can help to reduce the threat of tax-related identity theft.
The IP PIN is a six-digit number that will be assigned to you by the IRS and needs to be used in tandem with your other personal tax information when you file your annual income tax return. In order to obtain one you’ll need to spend some time registering with the IRS.gov website in order to create an online account.
While it does involve another level of work, creating an online account and receiving the six-digit IP PIN can help keep your information much more secure. The IRS will always crosscheck any contact from you via the IP PIN, especially when it comes to tax filing time. It basically adds another level of security to proceedings, meaning that there is more crucial information needed on top of your Social Security Number, name and address details.
Once you’ve created an online account with the IRS website you’ll find that the revenue service also offers an IPN tool, which will get the wheels in motion. You’ll need to tell the IRS your email address, given them your Social Security number or Individual Tax Identification Number as well as letting them know your mailing address along with tax filing status and a financial account number.
Naturally, be sure to check that the IRS.gov site it the official one if you’re handing over this information as the process involves revealing a lot of information about yourself. Although there are some hoops to jump through initially the process is automatic once everything is in place. The IP PIN works for one year, with the same process applying if you want to avoid tax identity theft in the future too.
Prevention is always better than cure, so as long as you’re diligent and careful about who you share your personal data with then the risk of identity theft is lessened somewhat. However, it’s also good to know that there are some solid options open to you if you are unfortunate enough to fall victim to criminals.