The recent announcement by the IRS that more than 100,000 individual taxpayers have had tax information stolen, leading to the possible filing of fraudulent tax returns, only affirms what we all already know: Identity theft is rampant and no one is immune.
Although the IRS has stopped 19 million suspicious tax returns, more than $5 billion in fraudulent refunds have nevertheless been paid, resulting in delays of up to a year for some taxpayers receiving refunds.
While the IRS continues to develop procedures with financial institutions and tax preparation software companies to curtail fraud, we can take the following steps to avoid becoming a victim:
- Don’t carry your Social Security card or other documents that include your Social Security number with you on a regular basis;
- Don’t give a business your Social Security number just because they ask; hand it over only if absolutely required;
- Protect all financial information;
- Check your credit report at least once a year;
- Review your Social Security earnings statement annually;
- Protect your computer using firewalls and anti-spam/virus software, updating security patches and changing passwords for Internet accounts; and
- Don’t give personal information over the phone, through the mail or over the Internet unless you are sure you know with whom you are dealing.
And if you suspect that you may be a victim of tax-related identity theft, immediately call the number on any IRS notice you receive and/or complete IRS Form 14039, the Identity Theft Affidavit, available on the IRS website. The form should be mailed or faxed according to its instructions and you will receive an identity protection personal identification number to use on your next tax return filing.
While taking these steps will not guarantee protection from tax-related identity theft, they will minimize the chances.
Williamson is professor of accounting and taxation at American University, where he is also director of the masters of science in taxation degree program and executive director of the Kogod Tax Center at the Kogod School of Business.