BHT&D Certified Public Accountants Blog

How to Prevent Tax-Related Identity Theft

Posted by Steven Thompson on Mon, Jul 08, 2013 @ 09:00 AM

tax related identity theftA question we sometimes hear is: "I have heard a lot about tax-related identity theft lately. How can I protect myself from this potential problem?" With the amount of identity theft that occurs, this is a good question to think about. Let's discuss some preventative steps you can take to prevent tax-related identity theft.

Tax-related identity theft occurs when the thief obtains your social security number and files a fraudulent tax return, under your social security number, requesting a bogus refund.

When you attempt to e-file your return, it will be rejected because the IRS will already have a return on file for your social security number. This will hold up your legitimate return and refund until the issue is resolved. This can take a long time.

The IRS recently reported that there were an estimated 1.5 million fraudulent tax returns for the 2011 filing season. This number is expected to grow. Investigators found 2137 tax returns filed from a single address for $3.3 million in refunds.

If your return is rejected, you should thoroughly investigate this problem. Not only could there be tax filing issues, but it could also be an indication of other identity theft issues.

Preventative steps you can take:

  1. Invest in and use a shredder before discarding information. Barcodes on documents may include personal information. Thieves could get a hold of discarded credit card applications, fill them out and obtain a credit card in your name.
  2. Protect your computer with anti-spam and antivirus software. Update security patches and regularly change passwords for internet accounts with sensitive information, such as online banking sites
  3. Never open or respond to emails that claim to be from the IRS. They do not communicate through email.
  4. Protect your social security cards and other sensitive information, including old tax returns. Store them in a secure place in your home.
  5. Mask your social security numbers on everything you print, including your tax return.
  6. Avoid giving your social security number to businesses just because they ask for it.
  7. E-file your tax return as soon as you can before any fraudulent return is filed.
  8. Check your credit reports for suspicious activity.

Tags: Individual Tax Return, Prevent Tax Identity Theft