Tax Identity Theft: What it Is and How to Protect Yourself

The sheer thought of identity theft is frightening. Tax identity theft, in particular, is increasingly popular and becoming a growing problem. According to an IRS watchdog, in 2013, more Americans’ identities were stolen in tax refund crimes in the first six months of the year than in all of 2012. It is estimated that 1.2 million taxpayers were victims of tax identity theft last year.

Tax identity theft defined

Tax identity theft occurs when someone else uses your social security number to obtain a tax refund or to get a job.

Uncovering tax identity theft

You are more than likely a victim of tax identity theft if you receive a notice from the IRS stating you earned wages from an employer you don’t recognize or if more than one tax return was filed using your SSN.

The effects

If someone falsely uses your SSN to report wages before you do, they may receive your refund first. When you file your return at a later date, you will receive notification from the IRS that more than one return was filed for you. If someone falsely uses your SSN to get a job, then that employer will likely report that person’s earnings to the IRS using your SSN. After you file, you will then receive a notice from the IRS stating that you did not report all of your earnings. The IRS doesn’t know that you don’t recognize this false employer.

Repairing the damage

If you receive a notice from the IRS stating that more than one return was filed under your SSN, or that you did not report all of your wages, it is critical you contact the IRS immediately because you may be a victim of tax identity theft.

The IRS employs specialists who will work with you to file your appropriate return, get  you a correct refund, and protect your account in the future. You should also file a police report to report the fraud. Finally, you need to send a copy of your police report to the IRS Identity Protection Specialized Unit along with proof of your identity. It’s also important to keep track of the dates you made calls to the IRS and sent letters. You should always keep copies in your files for your reference.

Protect yourself and stay educated

Once you have contacted the IRS, it’s important that you take additional steps to minimize any potential damage. You should order credit reports and set up fraud alerts with all major credit reporting agencies. You should also file an identity theft complaint with the Federal Trade Commission. It’s important to stay educated on how to protect yourself and to tell your friends and family. Tax Identity can happen to anyone. To help raise awareness, the FTC instituted a national Tax Identity Theft Awareness Week, January 13 – 17, to raise awareness about this crime and to educate consumers.

Tax identity theft can cause multiple problems for you aside from your taxes. If your credit is ever damaged as a result of tax identity theft, you should consider credit repair solutions.  Let us at Ovation help you. We offer a wide range of credit repair solutions that are customized to meet your unique needs.

Contact us today to see how we can help.