Who’s Stealing Your Identity This Tax Season?

It’s tax season for you and a veritable identity gold mine for thieves!

Empowered with a name and Social Security number, crafty thieves can open credit cards, take out loans, wipe out your bank account and even file a tax return in your name to get a fraudulent refund with just a few clicks on the keyboard.

How common is tax-related identity theft?

Tax identity theft is generally less common than other identity theft and fraud types, such as someone stealing and using your credit card account or opening a new credit account using your identity.

Tax identity theft has also decreased in prevalence over the past few years. In part, this is due to a joint effort by the IRS, state tax agencies, private tax preparation companies, tax professionals, payroll processors, and financial institutions. Together, they formed a Security Summit in 2015 to fight refund fraud, often perpetrated by organized crime syndicates.²

From 2015 to 2019, there was an 80% decline (677,000 to 137,000) in the number of taxpayers who filed IRS identity theft affidavits—a form you attach to your tax return if you’re the victim of tax identity theft.

In addition to responding to taxpayers who report being victims of identity theft, the IRS actively identifies suspicious returns. It then reaches out to taxpayers to confirm their information before processing the return. In 2019, the IRS says it stopped 443,000 confirmed fraudulent returns (which would have resulted in $1.9 billion in refunds) from being processed.

What Are Some Signs of Tax Fraud?

• The IRS rejects your e-filed return because your Social Security number was already used to file a tax return
• The IRS sends you a tax transcript, or you receive a notice that an online account has been created, accessed, or disabled when you didn’t take any action
• The IRS sends you a notice saying you owe taxes, your refund is offset, or they’re taking collection actions against you because of a tax return from a year when you didn’t file
• Your state unemployment agency sends you a Form 1099-G, but you didn’t collect unemployment
• You receive tax forms, such as a W-2 or 1099, from a company you didn’t work with during the year

If the IRS suspects your identity has been stolen, they may send you a letter asking you to verify your information. We’d like to work ahead of the game and help you learn some ways to protect your identity. Contact us today at (540) 720-5656.

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