According to the Federal Trade Commision, there are over 9 million victims of Identity Theft in the US every year. It becomes a stressful challenge for businesses, organizations and government agencies, including the IRS.
In most cases of Identity theft, you may not be aware that someone has stolen your identity. Identity theft happens when someone uses your stolen Social Security Number to file a tax return claiming a fraudulent refund. Luckily, the IRS is the first to detect the the fraud after you try to file your taxes.
The IRS handles identity theft with a strategy of prevention, detection, and victim assistance. The IRS works hard to prevent any events of this crime and has made it one of their top priorities.
Here are 10 things to know about ID theft:
- Protect your Records. Carrying your Social Security Card or other documents is not advisable. Provide your SSN only when it is necessary and you are acquainted with the person requesting it. Safeguard all your personal information in your home and install anti-spam and anti-virus softwares in your computers. Also to further prevention, change your passwords routinely for your Internet accounts.
- Don't Fall for Scams. Beware of alarming phone calls from someone claiming they are the IRS. The IRS will not call about owed taxes beforehand without mailing out a bill first, nor will they ask for an immediate payment. If you do not owe any of these false claims, report the incident to the Treasury Inspector General for Tax Administration (TIGTA) at 1-800-366-4484.
- Report ID Theft to the Law Enforcement. If you believe your SSN has been endangered and you may be a victim of ID theft, file a police report and a report to the Federal Trade Commision using the FTC Complaint Assistant. The sooner you file the report with the three credit bureaus, the sooner they can place a freeze on your account to prevent any more incidents.
- Complete an IRS form 14039 Identity Theft Affidavit. After filing a police report, file an IRS FORM 14039 Identity Theft Affidavit. Mail or fax the form according to the instructions. Resume paying your taxes, and file your tax return, even if it is processed on paper.
- Understand IRS notices. As soon as the IRS verifies the taxpayer's identity, a letter will be mailed to them. The letter states that the IRS is monitoring the taxpayer's account and may have an Identity Protection Personal Identification Number (IP PIN) for tax filing purposes.
- IP PINS. Once the taxpayer reports themselves as a victim or the IRS identifies them as so, they are issued an IP PIN. It is a unique six-digit number that is used to file a tax return. Since 2014, the IRS has created an IP PIN Pilot program, that grants residents of Florida, Georgia, and Washington D.,C, the choice to apply for an IP PIN because of the high tax-related theft rate in those states.
- Data Breaches. Not all data breaches result in identity theft and not every identity theft cases involve taxes. Be aware of all the information has been stolen before contacting the IRS.
- Report Suspicious Activity. Follow the chart on How to Report Suspected Tax Fraud if you suspect or know of an individual or business that is conducting tax fraud.
- Combating ID Theft. Throught the years, 2,000 people have been convicted with refund fraud related to identity theft. The average prison sentence has went from 28 months in 2013 to 43 months in 2014 and longest sentence being 27 years.
As of 2014, the IRS has blocked more that $15 billion of fraudulent refunds. It continues to advance its processing filters, and stop more suspicious returns before they are handled. With the new filters, 3 million suspicious returns for review have been caught, which is a 700,000 rise from the year before.
- Service Options. All tax-related identity theft information is available online at http://www.irs.gov/Individuals/Identity-Protection