tax scams tax-related identity theft

Tax-Related Identity Theft

In the next installment of the IRS list of tax scams, we'll explore the topic of identity theft.  Tax-related identity theft is defined as when a person obtains access to your social security number and files a tax return on your behalf.  The IRS warns taxpayers to watch out for this modern day scam at tax time.

The IRS has identified this as one of the most common scams in the United States as has begun to make a concerted effort to put this to a halt.  In 2014, the IRS initiated 1,063 investigations on identity theft and sentenced 748.  This number is up 75% from just a year earlier.  During the period from 2011 through October 2014, the IRS stopped 19 million suspicious returns and saved nearly $63 billion in fraudulent refunds from the hands of criminals.  Although they has made significant progress over the past few years, they still have a long way to go.

The IRS is continues to improve their safety measures each year.  Currently they use data models and filters to identify potentially fraudulent returns, and they aim to improve upon these models each year with the more data they collect.  According to the IRS, “These pre-refund filters stop the vast majority of fraudulent returns.”  They also continue to create partnerships with financial institutions in order to identity and stop fraudulent refunds.

Tips for Avoiding Tax-Related Identity Theft

The IRS has provided the following tips on how you can protect yourself from identity theft:

  • Never carry your Social Security card or any documents that include your Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN).
  • Don’t give a business your SSN or ITIN just because they ask.
  • Guard your financial data.
  • Closely monitor your credit report.
  • Assess your Social Security Administration earnings statement annually.
  • Be sure your personal information is safely secured in your home.
  • Use firewalls, anti-spam/virus software, and update security patches to protect your computer
  • Change passwords for Internet accounts frequently
  • Never provide personal information over the phone, through the mail or on the Internet unless you have initiated the interaction.

Resources

To receive all the latest information on the 2015 tax season and how to approach a Tax scam as an independent preparer, check out our IRS-approved continuing education courses.  All the important information for the Annual Tax Refresher Course is handed down directly by the IRS through the Annual Filing Season Program, assuring all courses are up-to-date and cover all the material you need.