As you finish your 2012 taxes, consider this scenario: Your accountant tries to submit your return to the IRS…which proceeds to reject it. It turns out your return has already been filed, the tax agency explains. By someone else. Using your Social Security number.
This is what happens when you’re a victim of identity theft tax fraud. Criminals assume your identity so they can steal your tax refund check. “In an epidemic that so far shows no signs of abating, crooks have submitted billions of dollars in fraudulent refund claims to the Internal Revenue Service using the stolen names and Social Security numbers of more than a million real people,” explains Forbes.
And the number of these cases is skyrocketing. The IRS received more than 34,000 tax identity theft cases in fiscal year 2011 – a 97 percent increase over 2010, according to ABC News. And all that an ID thief needs to become “you” is your name and Social Security number, according to Credit.com.
According to the IRS, you may be a tax identity theft victim if the agency sends you a letter stating:
- More than one tax return was filed under your identity.
- You have a balance due, refund offset or have had collection actions taken against you for a year in which you did not file a tax return.
- IRS records indicate you received wages from an employer unknown to you.
If you do receive such a letter from the IRS, the agency urges you to “respond immediately.” After reaching someone at the Service, the IRS site says, you’ll need to fill out an Identity Theft Affidavit form.
Beyond that, you’ll want to make sure your identity theft hasn’t spread beyond your tax return. The Federal Trade Commission recommends taking the following steps:
- Place a fraud alert: Contact one of the three credit reporting companies – Equifax, Experian or TransUnion — and report that you’re an identity theft victim. Ask the company to put a fraud alert on your credit file. Then confirm that the credit bureau you’ve called will alert the other two.
- Ask for your credit report: Having placed a fraud alert on your credit report entitles you to a free credit report from each of the three credit bureaus. When you receive them, examine them for suspicious activity. If you find any, contact the related businesses.
- Create an identity theft report: Contact the FTC (877-438-4338 or 866-653-4261). Write up a report about your identity theft and submit it to the FTC (you’ll also need to fill out a complaint form). Like the form you filled out for the IRS, it too will be called an Identity Theft Affidavit. Print out the Affidavit, take it to the police, and file a police report. Your Affidavit, combined with the police report, will comprise your Identity Theft Report. The Identity Theft Report will help you get fraudulent information removed from your credit report and stop companies from collecting debts resulting from identity theft.
After taking these initial steps, the FTC also offers recommendations on follow-up actions you can take if necessary.
Have you, or has anyone you know, been the victim of identity theft tax fraud? How was the problem handled?