By John H. Nardozzi, CPA, CVA
Identity theft is a very real and growing danger to the financial well being of thousands of Americans. Identity theft occurs when someone uses your personal information such as your name, Social Security number (SSN), or other identifying information, without your permission, to commit fraud or other crimes. Even a business can be exposed to serious financial problems through the theft of federal identification numbers, checking account routing numbers, and corporate FID#.
Identity thieves have also been know to use a legitimate taxpayer’s identity (individual or corporate entity) to fraudulently file a tax return and claim a refund. Generally, the identity thief will use a stolen ID number to file a forged tax return and attempt to get a fraudulent refund early in the filing season. The criminals use Social Security numbers of the living and even the recently deceased. Scammers are also using taxpayers’ stolen information to claim winnings such as lottery prizes and casino payouts, and saddling the legitimate taxpayer with paying the bill on the winnings.
In the latest attempt at identity theft, crooks are sending out fake tax notices and making phone calls to unsuspecting individuals and business owners. This is called “phishing,” as they thieves are hoping to “catch” someone unaware in order to steal their data and their money.
Be forewarned: the IRS never sends out emails to taxpayers. Never! Another tip-off: the IRS will never call you up to discuss anything over the phone, but only to make an appointment.
Be alert to possible identity theft if you receive an IRS notice or letter that states that:
- More than one tax return for you was filed
- You have a balance due, refund offset, or have had collection actions taken against you for a year you did not file a tax return
- IRS records indicate you received wages from an employer unknown to you
- You get a notice that does not match up with information you already have on hand
You may be unaware that any of this has happened until you file your real return later in the filing season and discover that two returns have been filed using the same Social Security number. You’ll be forced to spend time and money to try to sort out the confusion.
What should you do if your tax records were affected by identity theft? If you receive a legitimate notice from the IRS, respond immediately. If you believe someone may have used your tax identification number fraudulently, notify the IRS immediately by responding the the name and number printed on the notice or letter.
If you become a victim of identity theft or you believe you may be at risk due to a lost or stolen purse or wallet, questionable credit card activity, or unusual activity on your credit report, contact the IRS Identity Protection Specialized Unit. You can call them toll-free, at 1-800-908-4490. You will need to fill out the IRS Identity Theft Affadavit, Form 14039.
Here are several ways you can minimize the chance of becoming an identity theft victim:
- Don’t carry your Social Security card or any document(s) with your SSN on it
- Don’t give a business your SSN just because they ask, provide it only when required
- Protect your personal and company financial information and tax returns
- Check your credit report every 12 months
- Secure personal information in your home
- Protect your computers by using firewalls, anti-spam/virus software, update security patches, and frequently changing passwords for Internet accounts
- Don’t give personal or company information over the phone, through the mail, or over the Internet unless you have initiated the contact or you are sure you know the person or company with whom you are dealing
You can also report suspicious activity to the IRS by calling 1-800-366-4484. If you receive an electronic scam via email you can forward it to phishing@IRS.gov for investigation.
John H. Nardozzi, CPA, CVA, MST is the owner of Nardozzi, LLC (www.nardozzillc.com) which provides consulting and valuation services for oilheat and propane dealers.