Prevent Tax Identity Theft By Filing Early?

Jordan Empey, CPA, Tax Partner,

  Filed under: Archived, Business Taxation, News and Tax Blog, Personal Taxation

Identity Theft

 

If you’re like many Americans, you may not start thinking about filing your tax return until close to this year’s April 18 deadline. You may even want to file for an extension so you don’t have to send your return to the IRS until October 16. However, it can be in your best interest to file early. 

In an increasingly common scam, thieves use victims’ personal information to file fraudulent tax returns electronically and claim bogus refunds. This is usually done early in the tax filing season. When the real taxpayers file, they’re notified that they’re attempting to file duplicate returns. A victim typically discovers the fraud after he or she files a tax return and is informed by the IRS that the return has been rejected because one with the same Social Security number has already been filed for the same tax year. The IRS then must determine who the legitimate taxpayer is.

Tax identity theft can cause major headaches to straighten out and significantly delay legitimate refunds. But if you file first, it will be the tax return filed by a potential thief that will be rejected — not yours.

IRS Safety Tips

Keep Your Computer Secure

  • Use security software and make sure it updates automatically; essential tools include using a firewall, virus/malware protection and file encryption for sensitive data
  • Treat your personal information like cash, don’t leave it lying around
  • Check out companies to find out who you’re really dealing with
  • Give personal information only over encrypted websites – look for “https” addresses.
  • Use strong passwords and protect them
  • Back up your files

Avoid Phishing and Malware

  • Avoid phishing emails, texts or calls that appear to be from the IRS, tax companies and other well-known business; instead, go directly to their websites
  • Do not open attachments in emails unless you know who sent it and what it is
  • Download and install software only from websites you know and trust
  • Use a pop-up blocker
  • Talk to your family about safe computing practices

Protect Personal Information

  • Do not routinely carry your Social Security card or documents with your SSN.
  • Do not overshare personal information on social media.
  • Information about past addresses, a new car, a new home and your children help identity thieves pose as you.
  • Keep old tax returns and tax records under lock and key or encrypted, if electronic.
  • Shred tax documents before trashing.

Additional steps:

  • Check your credit report annually; check your bank and credit card statements often;
  • Review your Social Security Administration records annually: Sign up for My Social Security at www.ssa.gov.
  • Watch out for IRS Impersonators. The IRS will not call you with threats of jail or lawsuits. The IRS will not send you an unsolicited email suggesting you have a refund or that you need to update your account. The IRS will not request any sensitive information online. These are all scams, and they persistent and change frequently. Don’t fall for them. Forward IRS-related scam emails to phishing@irs.gov. Report IRS-impersonation telephone calls at www.tigta.gov.

Find the latest tax tips at IRS Security Awareness Tax Tips.

Source: IRS tips Issue Number: IRS Taxes. Security. Together. Tax Tip Number 12

Jordan Empey, CPA, Tax Partner
Jordan has been in public accounting since 2005. He specializes in serving auto dealer, real estate, and construction clients. Learn more about Jordan here.