Identity Theft and Your Taxes
Identity theft is one of the fastest growing crimes in the United States, resulting in millions of victims every year. Identity theft is a type of fraud in which a thief uses your personal information to conduct transactions in your name. Criminals may, for example, use your identity to open or empty bank accounts, obtain credit cards, or take out loans. In addition to fraud directly concerning your finances, thieves can also use your information to commit crimes that may affect your taxes.
Types of Fraud
With your identifying information, an undocumented worker or another individual may use your Social Security Number on job applications and employment paperwork. The employer would then report the thief’s W-2 wages earned to the IRS using your information, and as a result, when you file your tax return, it will appear to the IRS that you did not report all of your income.
An identity thief may also file a tax return using your name and Social Security Number in order to obtain a refund. When you later file your return, the IRS will believe that you already filed and received a refund; therefore, the return you submitted would be considered a second copy or duplicate.
If you receive a notice from the IRS that leads you to believe that your personal information has been used to commit tax fraud, contact the IRS by phone or in writing as directed in the notice. Possible triggers indicating you may have been the victim of identity theft include statements that you received wages from an employer unknown to you or that more than one tax return was filed in your name. IRS tax examiners can then work with you and other agencies, such as the Social Security Administration, to resolve these discrepancies. It is important to note that the IRS will not initiate a request by e-mail for taxpayer information in this, or any other, situation. If you do receive such a request, it may be an attempt from identity thieves to obtain your tax information.
In addition to other precautions you may take to protect your identity from thieves, the IRS recommends that you be extremely careful when choosing someone to assist you with tax preparation. Because this person will have access to your personal financial records, be sure to research their credentials and experience. Avoid preparers who guarantee results, base fees on a percentage of the amount of refund, or claim they obtain larger refunds than other preparers.
For more information about identity theft and ways to protect yourself, visit the Federal Trade Commission’s website at www.ftc.gov.
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