January 29, 2018, was important for more than one reason. The day embarked the beginning of the tax filing session. Secondly, the day kick-started the much anticipated Tax Identity Theft Awareness Week which ended on February 2, 2018.
Why was Tax Identity Theft Awareness Week organized?
The growing concern over tax identity theft compelled the FTC to set aside a separate week for tax identity theft awareness. FTC organized a series of free events and webinars where experts from the IRS, FTC, AARP Foundation, and Department of Veterans Affairs gave additional information on how to avoid being a victim of tax identity thefts.
The FTC and the IRS were forced to organize Tax Identity Theft Awareness Week since:
- There were 1500 data breaches in 2017 which exposed the confidential information of Americans
- There were nearly 178 million exposed records
- Nearly $227,000,000 fraudulent refunds were claimed in 2017
- The IRS lost $46,400,000 to scammers
- There were more than 1.5 million fake tax returns in 2015
- FTC received 371,157 identity theft complaints in 2017
- 22% of the identity-theft complaints were related to tax
The main reason behind organizing this program was to help people detect the warning signs of tax identity theft. Tax identity theft is specifically frustrating for both the IRS and the consumers since they lose a lot of money and time to recover it. It’s a crime and a big problem in the country.
Both the IRS and the FTC are trying their best to reduce the number of tax identity thefts in the country, but criminals are outsmarting them. Criminals are stealing the Social Security Number and other details of consumers for filing tax returns in their names in the hope for getting refunds.
What is tax identity theft?
Tax identity thefts are committed when imposters file an income tax return in your name for stealing your refunds. Even if you don’t receive a tax refund every year, you’re not safe because criminals don’t steal your information from legitimate income forms. Scammers create fraudulent W-2s and other forms for getting refunds quickly.
What are the warning signs of tax identity theft?
Watch out for the income tax identity theft warning signs to avoid long-term hassles later on.
- The IRS shows that you received wages from an employer you don’t know.
- Someone filed an income tax return using your SSN.
- You owe tax and collection accounts against you for a year, but you didn’t file an income tax return.
How are imposters stealing information?
- They call taxpayers as a licensed tax preparer to get their confidential information.
- They send deceitful emails to taxpayers for stealing their personal information.
- They search trash cans for credit card bills and documents to get sensitive information of taxpayers.
Recently, I came across a woman in debt forums who incurred $20,000 credit card debt due to identity theft. She had four credit cards – 3 new and one old. She seldom used the old card since it had high APR. When she pulled her credit report in October 2017, she was taken aback. The bank has charged-off that credit card account and she owed $20,000 on it. When she called the bank in desperation, they informed that she had made purchases worth $20,000 in the last few months. When she objected and refused, the bank told her that they couldn’t do anything. The account has been charged-off, and a debt collection agency would soon contact her.
She was a victim of identity theft. She wouldn’t have known about it had she not checked her credit report.
Luckily, the debt collection agency agreed to settle the credit card debt at $10,000. Still, it was a big financial loss for her.
This is just a simple instance. People have a chance to settle credit card debt. But this isn’t possible in case of the tax debt.
How can you avoid tax identity thefts?
Use these tips to protect yourself against identity theft.
- Reply to all the mails sent by the IRS as early as possible.
- Check all the copies of credit reports and see if there are any authorized accounts in your name.
- Destroy all the copies of your calculation sheets, tax return and drafts you don’t need.
- Use a secure Internet connection when you’re filing income tax returns electronically. Avoid public Wi-Fi hotspots.
- Never mail tax returns from your home. Mail them straight from your home.
- Don’t download attachments from suspicious email.
- Install a strong anti-virus on your computer. Use security software with the firewall.
- Avoid carrying Social Security Card in your wallet to protect your personal information.
- Don’t get scared by threatening calls and texts. Never disclose your personal information over the phone. Always remember that the IRS never initiates the first contact via social media, email, phone or text.
- Don’t get scared if a debt collection agency threatens to send you to jail for not paying off the tax debt. Contact the IRS directly.
What to do if you’re a victim of tax identity theft
Here are the five steps you should take when you become a victim of tax identity theft.
- Contact the three major credit reporting agencies and place a fraud alert on your credit report:
- Visit the official website of Equifax or call 800-525-6285
- Visit the official website of Experian or call 888-397-3742
- Visit the official website of TransUnion or call 800-680-7289
- Submit a formal complaint at identitytheft.gov.
- Submit the IRS Form 14039, Identity Theft Affidavit if you come to know that someone has already filed an income return under your SSN, and your filed return gets rejected.
- Call 1-800-908-4490 for getting specialized assistance from the IRS.
- Close your financial accounts that have been opened or compromised without your permission.
Tax identity thefts create an additional financial burden on the government since they lose millions every year. On the other hand, people are extremely irritated since their legitimate income tax returns are not accepted until the fraud has been alleviated. It’s high time people file their income tax returns before the imposters do it.