It's as simple as having someone get a hold of your social
security number and personal information, and before you even know it, a tax
return under your name and identity has been filed. Identity theft at tax time
is a growing problem, and it’s been estimated that more than $5.2
billion of U.S. taxpayer money may have been paid out in tax refunds to
identity thieves who filed some 1.5 million fake returns in 2011, and scammers
are likely to steal $21 billion more over the next five years. Unfortunately, in many cases, the
victim is unaware that this has happened until their tax return is filed, only
to find that a return has already been submitted in their name with fake
information.
What can you do to help protect yourself at tax time? First and foremost – file early. Most
identity thieves file early, before the legitimate tax return has been filed,
preventing it from being questioned. The return is then paid out, and the
actual taxpayer is left to clean up the mess once they have filed. Affected taxpayers must go through a
longer, more complicated process, starting with a requirement to file an
authentic paper return, which takes longer to process. They must then wait an
additional amount of time while the IRS investigates the identity of the
taxpayer and confirms what has happened. Additional steps will also be
necessary in future years using a new IRS issued Individual Protection Personal
Identification Number (IPPIN) Personal Identification Number that will have to
be included on future tax returns. So, the
earlier you file, the better your chance of avoiding this situation.
Other safety measures to take include:
E-filing, or electronically file, your
tax return. By e-filing, only you and your tax preparer will be handling your
documents. The less people handling your information, the lower your chances
are of having your personal information compromised.
Next, keep important documents, such
as copies of tax returns, credit card statements, cancelled checks, paystubs
and similar data in a secure location like a locked file cabinet, or scan the
information into a secure computer or web-based document storage program.
Jackson Hewitt’s MyTaxManager is an example of a secure way to store your tax
documents.
Be sure to destroy documents older
than four years. DO NOT simply throw them away—shred them.
Be cautious and vigilant when it comes
to providing any personal information, such as your social security number,
bank or credit account numbers over the phone or via e-mail, and avoid carrying
your social security card in your wallet. Be aware that the IRS never
communicates via e-mail. If you get an e-mail inquiry from someone claiming to
be from the IRS, or if you get a phone call asking for you to e-mail personal
information, do not provide these details without verifying the legitimacy of
the request first.
Decline using your social security
number as an identifying number on accounts. Very few organizations may legally
require you to use your social security number.
If you suspect your identity has been
stolen, contact the IRS right away. A resource can be found at IRS Identity
Theft Hotline. The IRS has listed ways taxpayers can help protect themselves, as well as
steps to take if they think someone may have accessed their personal
information.
The
bottom line: Prevention and protection up front will save you a great deal of
trouble and time later should your personal information be compromised.