Tips to Protect Yourself from Taxpayer Identity Theft

Sarah Gutierrez

Senior Tax Accountant

Each year, millions of people have their identities stolen in different ways, including theft of their tax information. Taxpayer identity theft is becoming more prevalent, but there are simple steps you can take to protect yourself.

What is Taxpayer Identity Theft?

Taxpayer identity theft happens when someone steals your personal information, like your social security number and uses it to file a fake tax return in your name so they can claim your refund. This is often done early in the filing season before you have even started your return. Most people are unaware until they try to file a return and discover that IRS has already received a return under their name and their return is either rejected or the IRS asks for additional information to sort out the mix-up.

How to prevent identity theft?

While it is impossible to eliminate identity theft, there are ways to minimize the risks. Some steps for you to consider:

• Do not carry your social security number card with you; keep it in a secure spot at home, like a locked drawer or safe.
• Don’t give out your full social security number. Most financial institutions will only ask for the last four digits to confirm who you are.
• Keep any financial information secure, including at your office or workplace, not just at home.
• Check your credit report once a year for unusual activity. Consider “freezing” your credit (which blocks anyone from opening new accounts in your name) and only unfreezing it when you actually need it, for example, when applying for a loan.
• Shred any documents containing personal or financial information before throwing them away.
• Send sensitive documents through secure methods, encrypted email, password-protected files, or a secure online portal. Most banks and financial companies offer secure portals to communicate and process documents.
• Do not answer phone calls, texts, social media messages or emails from numbers or people you do not recognize.
• Use a phrase (a short sentence rather than a single word) for your passwords and enable two-factor authentication for your devices and for all your online accounts.
• Be cautious of using public Wi-Fi networks and use a Virtual Private Network (VPN) on your computers and phones.

If you believe you’re a victim of identity theft

• If you receive an IRS notice about possible fraudulent activity, follow the instructions and use the contact information shown on the notice right away.
• If you haven’t received an IRS letter or notice but think someone may have filed a tax return in your name, file an IRS Identity Theft Affidavit (Form 14039) to report it.
• If you are worried your personal information was exposed (even if no fraud has happened yet), you can request an IRS Identity Protection PIN (IP PIN). This is a six-digit number that is used to identify you when you file a return so a thief can’t file a return without it. You can apply for an IP PIN for free through your IRS Individual Online Account. If you cannot get an IP PIN online, you can request one by mail using IRS Form 15227. Finally, never share your IP PIN with anyone other than your trusted tax advisor.

If you need assistance with a tax-related identity theft issue, an IRS identity theft notice, or an IP PIN issue, call the IRS identity theft hotline.

• If your identity is stolen, outside of taxpayer identity theft, here’s what to do:
  • Report it to the Federal Trade Commission at IdentityTheft.gov or call the FTC Identity Theft Hotline.
  • Contact the three major credit bureaus (Equifax, Experian, and TransUnion) to place a fraud alert on your credit file.
  • If your Social Security number is misused, report it to the Social Security Administration.

Be vigilant! Requesting an IP PIN ahead of time is one of the best ways to prevent a fraudulent return from being filed. Remember, the IRS and state government will never contact you by email, telephone, text message, or social media to ask for personal, financial, or IP PIN information. Also, the IRS and state governments will not accept payments using gift cards.

We hope this information is helpful. If you’d like to discuss this information or feel you have been a victim of identity theft and would like our assistance in working with the IRS, please contact us at (630) 953-4900.