CPA Dave Young of Young and Company discussed identity theft, tax return theft and what you can do to avoid becoming a victim Monday on News 8 at Sunrise.
Young said in 2015 there were 490,220 identity theft complaints in the U.S. – a 47 percent increase from the previous year. A little more than 45 percent of those complaints were for tax or wage theft. In most cases, that involved someone stealing personal information and then using it to claim a tax refund.
According to the Federal Trade Commission, thieves use both the taxpayer’s name and Social Security number to obtain the refund. In some cases thieves will use their own name in combination with someone else’s Social Security number. In either case, they will have the money downloaded to a debit card to avoid having the money placed into a bank account.
Young said thieves will try to file early in the tax season, so when you file your return later it’s flagged as a second return with the same Social Security number. If you receive a notice from the IRS, respond immediately. You will need to fill out the IRS Identity Theft Affidavit, Form 14039.
For victims of identity theft who have previously been in contact with the IRS and have not achieved a resolution, please contact the IRS Identity Protection Specialized Unit, toll-free, at 1-800-908-4490. Young said be sure to contact the Federal Trade Commission as well at 1-877-438-4338 and contact the credit reporting agencies. All of this information can be found by clicking here.
If a criminal files a tax refund before you do, it can take six months or more to get your refund.
If your tax records are not currently affected by identity theft, but you believe you may be at risk because of a lost wallet or purse, or questionable credit card activity, Young said contact the IRS Identity Protection Specialized Unit at 1-800-908-4490. He said you can minimize your chance of becoming a victim by using a reputable tax preparer, check your credit report once a year, don’t carry your Social Security number in your wallet/purse, keep important documents in a home safe, and encrypt sensitive information on your computer.
For more information on this topic and others, visit the New York State Society of CPAs website, click here.