With identity thieves continuing to target the tax community, the IRS is urging you to learn the new signs of identity theft so you can react quickly to limit any damage.
The common signs of ID theft
Here are some of the common signs of identity theft according to the IRS:
- In early 2022, you receive a refund before filing your 2021 tax return.
- You receive a tax transcript you didn’t request from the IRS.
- A notice that someone created an IRS online account without your consent.
- You find out that more than one tax return was filed using your Social Security Number.
- You receive tax documents from an employer you do not know.
Other signs of identity theft include:
- Unexplained withdrawals on bank statements.
- Mysterious credit card charges.
- Your credit report shows accounts you didn’t open.
- You are billed for services you didn’t use or receive calls about phantom debts.
What you can do
If you discover that you’re a victim of identity theft, consider taking the following action:
- Notify creditors and banks. Most credit card companies offer protections to cardholders affected by ID theft. Generally, you can avoid liability for unauthorized charges exceeding $50. But if your ATM or debit card is stolen, report the theft immediately to avoid dire consequences.
- Place a fraud alert on your credit report. To avoid long-lasting impact, contact any one of the three major credit reporting agencies—Equifax, Experian or TransUnion—to request a fraud alert. This covers all three of your credit files.
- Report the theft to the Federal Trade Commission (FTC). Visit identitytheft.gov or call 877-438-4338. The FTC will provide a recovery plan and offer updates if you set up an account on the website.
- Contact your CPA, tax preparer or financial advisor if you suspect any tax-related identity theft. If any of the previously mentioned signs of tax-related identity theft have happened to you, please call to make an appointment to discuss what further steps you can take.
One way to head off fraud during tax season is to get your free annual credit report now. Credit reports often have errors in them; this quick checkup can be the first indication that some form of identity theft has taken place on your account.
The good news is that each of the major consumer credit reporting agencies is required by law to provide you with a free report once a year. Here’s contact information to help you get your free credit report:
Telephone: 1-877-322-8228
Website: www.AnnualCreditReport.com
Via mail: (fill out the online form and mail it to the following address)
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
Listed here are the three major credit agencies and how to contact them directly.
TransUnion
Telephone: 833-395-6938
Web site: www.transunion.com
Via mail: 2 Baldwin Place
P.O. Box 2000
Chester, PA 19022
Equifax
Telephone: 1-800-685-1111
Web site: www.equifax.com
Via mail: Equifax Credit Information Service
P.O. Box 740241
Atlanta, GA 30374-0241
Experian
Telephone: 1.888.EXPERIAN (397-3742)
Web site: www.experian.com
Via mail: P.O. Box 9701
Allen, TX 75013
Reminder: Each agency may try to upsell you into additional paid services. If you find problems on your credit report, work through the credit bureau’s process to correct the error. Also place fraud alerts on your credit agency account if you experience any kind of identity fraud.
Be Proactive!
Earlier this year, hackers were able to breach the security of Equifax, one of the three national credit reporting agencies. More than 143 million Americans — nearly half the country — were exposed to the attack, and may have had their personal information stolen, including names, birthdates, and Social Security and driver’s license numbers.
Equifax is still determining exactly whose data has been exposed. While you wait to find out, it’s worth taking a few proactive steps to make sure your info isn’t misused by hackers.
Start checking. Visit Equifax’s website at www.equifaxsecurity2017.com and enter your last name and last six digits of your Social Security number. The site will tell you whether it’s likely or not your data has been exposed, and put you on a list to get more information. You can also sign up for a year’s worth of free credit monitoring.
Watch your statements. Start checking your credit card statements, and pay special attention to cards you don’t use often. The initial reports from the breach were that hackers may have been making charges on underused cards.
Check your credit reports. You can look for suspicious items on your reports, such as new accounts being opened in your name, at all three credit report agencies: Equifax, Experian and TransUnion. Free annual reports are available at www.annualcreditreport.com.
Freeze your credit. If you suspect you may become a victim of identity theft, you can place a credit freeze on your profile at each of the three credit reporting agencies. This stops new accounts from being opened in your name. Note that you’ll have to unfreeze your accounts if you want to apply for new loans or make your credit accessible for things such as job applications.
File your taxes early. One of the most common ways identity thieves use your information is to try to claim a tax refund with your data. This was the most common scam in 2016, according to the Better Business Bureau. If you file your tax return as early as possible, you shut down this opportunity for any would-be thieves.
Identity theft is a growing problem in the United States, and dozens of companies offering various forms of identity theft protection have sprung up to combat it. Unfortunately, these services often do little to actually protect people’s identities, according to a study released by the U.S. Government Accountability Office (GAO).
Both the GAO study and consumer protection organizations like The Identity Theft Council point out that consumers have more effective, low-cost methods to protect themselves from identity theft. Here are some of their tips:
Monitor your own credit. You can get a free credit report from each of the three credit reporting agencies once a year at www.annualcreditreport.com. You can stagger your request from each agency so that you can check your credit history for any suspicious new account openings every four months.
In addition, one of the most effective things only you can do yourself is to scan your monthly credit card and bank account statements. If you see any irregularities, contact the financial institution at once and let them know if you believe any charges are the result of identity theft.
Place a fraud alert. You can place a free fraud alert on your identity if you believe you’ve become vulnerable for any reason, either because you lost your wallet, had your home or car broken into, or had your information stolen online. All you have to do is call any of the three credit reporting agencies (Equifax 1-888-766-0008; Experian 1-888-397-3742; or TransUnion 1-800-680-7289) and they will notify the other two.
Placing a fraud alert lasts for 90 days. Any credit provider will have to take extra steps to verify the identity of any person who tries to use your credit and open new accounts. It can be renewed for free every 90 days.
Freeze your credit. If you aren’t going to be applying for new credit for a while, one of the most effective things you can do to combat identity theft is to put a temporary freeze on your credit. You’ll have to call each of the three credit reporting agencies and may be required to pay a small fee ($5 to $10 each) to freeze your account, after which no one will be able to access your credit to open new accounts. It won’t affect your credit rating or your ability to use your existing accounts.
Keep in mind that while this shuts down other people from accessing your credit, it also stops you from opening new accounts. It typically takes three days for the agencies to unfreeze your accounts, so keep that in mind if you want to apply for new credit, or need to allow a potential new employer to access your credit report as part of a background check.
Do your taxes early. One of the most common kinds of identity theft is when people use a stolen Social Security number and other personal information to file a fraudulent tax return in the hope of snatching a refund. Your best defense is to simply file your return as soon as possible. Once the IRS receives your return, it shuts the door on potential identity thieves.
School is well under way and the IRS has reminded us to pay attention to a new scam that is targeting students and their parents. Here is what you need to know.
- The scam – Callers will contact your student and demand payment of an unpaid Student Tax. This tax does not exist. The contact is typically via phone call, but can take the form of a realistic looking email.
- It will seem real – The caller will say they are from the IRS. They will have your student’s name and some of their personal information stolen from another source. There may be a caller ID displaying IRS. They will often call multiple times and may even threaten arrest.
- Their goal – To get your unwary student (or you – the unwary parent) to provide them with payment through a prepaid debit card, credit card, or other type of gift card.
- What to do – If this happens to you, hang up. If they call back, do not answer. Make sure your students are aware that this may happen and they should inform you immediately of the call. Remember, the IRS NEVER initiates a tax question with a phone call or email. You can also report the scam to the Treasury Inspector General for Tax Administration: IRS Impersonation Scam Reporting Form
Your data must be stolen
Should this scam occur, one thing is certain. Personal data has been stolen. If you receive this scam call, you may be targeted for other scams. So be alert and consider reviewing your credit reports to ensure someone is not trying to access your identity in other ways.
Most everyone knows you need to budget, balance and save. However, here’s a list of the ten steps to ensure you walk on stable financial ground.
- Set a budget and stick to it – Make financial goals and then create a budget that supports those goals. Account for expenses on a monthly basis and set budget limits for dinner out and other forms of entertainment.
- Pay off all debt (except a home mortgage) – Make debt payments a part of your budget until paid off.
- Set aside money for future expenses – Plan in advance for both short- and long-term big expenses and create a line item for them in your monthly budget.
- Save for emergencies – Set aside funds each month to build a reserve of three months living expenses (eventually build up to six) to guard against job loss or unexpected expenses. Having these savings automatically deducted you’re your income makes it easier.
- Take advantage of available plans – Company-sponsored 401(k) plans and/or other retirement plans, 529 savings plans and education funds will help you financially later. A little put away today can mean a lot is available tomorrow.
- Spend only what you have – Limit uses of credit vehicles like credit cards and high interest cash advances. Pay off credit cards by due dates each month.
- Manage your financial life – Regularly manage and monitor your accounts and statements, including balancing your debit/checking account and investment accounts.
- Keep an eye on your credit score – Making timely payments is one of the best ways to maintain good credit for future lending. If used responsibly, automatic payment systems like online banking can be beneficial.
- Set up Identity Theft Protection on your financial accounts – Regularly change your online and mobile passwords, and safeguard your financial statements.
- Openly communicate with your spouse about your family’s financial position – Make sure you both agree on short- and long-term goals. Teach your children the power of saving and budgeting to put them on the path to a successful financial future.
To most people “ghosting” is the act of breaking up with a boyfriend or girlfriend by breaking off all contact. Now there is a new ghosting phenomena; stealing the identity of a recently deceased loved one.
Ghosting protocol
Would-be identity thieves scour obituaries to find as much personal information as possible about the recently departed. The more information available about the loved one the better. With this information, thieves can make purchases, open credit cards, create false IDs, and file fraudulent tax returns. This activity can go unchecked until all the proper paper work is filed on the deceased. It can be a nightmare to clear up the mess, all while dealing with the grief associated with losing someone close to you.
What can be done – There are actions available to reduce the risk of this happening:
Less is more – When creating an obituary, avoid being too specific on information that could be used by ID thieves. Print a birth year, but not the day and month. Omit the maiden name and the address of the deceased.
Home unattended – During the funeral and visitation, consider having a friend or relative stay at the home of the deceased. Thieves are known to target homes for burglary during the service.
Notify the bank – Remove the deceased’s name from joint bank and credit card accounts. Immediately close solo credit card accounts. Closely monitor any activity in the accounts.
Be proactive – Knowing it can take Social Security months to inform all interested parties of the death, proactively contact anyone who may need to know of the death. Report the death to Social Security. File a final tax return. Cancel the driver’s license to avoid duplicates being ordered.
Work with credit agencies – Contact the major credit agencies and follow their instructions to place a death notice in their records. This should help stop a thief from opening new accounts. Obtain a free credit report from one of the credit agencies and look for suspicious activity. Wait a few months and review a free credit report from a second agency. Continue to monitor activity on the deceased’s credit reports.
Fortunately, as long as your name is not on the accounts, family members are rarely liable for any illegal activity. But cleaning up the mess can be a real hassle.
Each year the IRS announces “Dirty Dozen Tax Scams” they encounter regarding frivolous tax arguments and fraud. While six of the “scams” are related to, “don’t cheat we have our eyes on you,” the other six are scams that all of us should be on guard to detect. Here are the largest three scams:
Identity theft – Identity theft tops the list of the dirty dozen this year. This reflects a truly bad year for the IRS. The IRS has acknowledged the theft of taxpayer’s private information three times in the past eighteen months. Thankfully, the IRS is taking precautionary measures to curtail this huge problem. For example, they are limiting the number of direct deposits it will make to any single account, working with states and tax preparation software vendors to put more controls in place, delaying the early processing of tax refunds, internal tracking within software programs, and continual checking for heavy filing activity. Some states will even be requiring driver’s license numbers on their tax forms. For people who have already had identity problems, there are taxpayer single use tax ID’s that change every year. If you wish to know more, here is a link to the IRS identity protection page: IRS Identity Protection: Prevention, Detection and Victim Assistance
Phone scams – Phone calls from thieves representing themselves as IRS agents continue to get more sophisticated. These thieves often have some personal information, the caller ID may show as coming from the IRS and the scam may involve numerous phone calls instead of a single contact. Some are even automated phone calls! Threats range from arrest warrants to deportation to law suits. Remember, never give information over the phone to someone claiming to be from the IRS when they call.
Phishing – This recurring scam involves receiving fake emails and creating websites that look like the real deal. The IRS will not send you billing information or refund information via email. Do not click on any link from an email received from the IRS unless you requested it. Remember the IRS does not initiate contact through emails.
Look for the second part of this article next week for more info!
Imagine this – you’ve given us all your documents early, we’ve prepped and processed your tax return, you’ve reviewed it and signed the eFile forms… then we call you and advise you that your tax return rejected eFiling because someone has already filed using your social security number! Sadly, this can happen if you become one of the growing number of victims of tax return identity theft. At least one estimate shows tax-related identity theft cases have increased 650% since 2008. Identity theft can delay your tax refund, but other consequences could be credit card debt or loans taken out in your name.
To avoid becoming a victim, we recommend the following:
- Safeguard your social security number and other financial information. Don’t send financial documents via email unless you use an encryption program. To send documents to us, use our LeapFile application to securely send us documentation.
- Check your bank and credit card transactions regularly and monitor your credit ratings.
- Don’t give out your information on the phone, even if the caller identifies themselves as an agent of the IRS or other authorities.
Identity theft and fraud are at an all-time high – you know it and we’ve told you about it. We recommend that you check your credit reports at least once a year. Credit reports often have errors in them and this quick checkup can be the first indication that some form of identity theft or fraud has taken place on your account. Review the information to ensure its accuracy.
The three major credit card reporting agencies – Experian, Equifax and TransUnion – are required by law to provide you with a free report once a year. A website has been set up specifically for this purpose:
Website: www.AnnualCreditReport.com
Telephone: 1-877-322-8228
Via Mail: Fill out the online form and mail it to:
Annual Credit Report Request Service
PO Box 105281
Atlanta, GA 30348-5281