11 Feb Beware of tax-related identity theft and fraud

Anita Byer

Tax-related identity theft occurs when a criminal uses your Social Security number to file a tax return under your name to steal your tax refund. According to the Treasury Inspector General for Tax Administration, the Internal Revenue Service stopped nearly $2 billion in fraudulent refunds last year. In 2023, the IRS identified over a million tax returns as potentially fraudulent, with associated refunds exceeding $6 billion. Since victims of tax-related identity theft and fraud are typically unaware until it is too late, staying alert and knowing the signs of fraud is key.

According to the IRS, you should be alert to possible tax-related identity theft and fraud if:

• You get a letter from the IRS about a suspicious tax return.
• You can’t e-file your tax return because of a duplicate Social Security number.
• You get a tax transcript in the mail that you did not request.
• You get an IRS notice that an online account has been created in your name or that your existing account has been accessed or disabled when you took no action.
• You get an IRS notice that you owe additional tax or refund offset, or that you have had collection actions taken against you for a year you did not file a tax return.
• IRS records indicate you received wages or other income from an employer you didn’t work for.

Since many scams begin with someone contacting you under false pretenses, knowing how and when the IRS contacts people can make it easier to identify imposters and impersonators. According to the IRS, initial contact is typically done by mail delivered by the U.S. Postal Service. The IRS may also contact you in other ways, depending on the circumstances. However, the IRS does not:

• Direct message or take payment on social media.
• Accept gift cards or prepaid debit cards as payment.
• Call with automated messages that threaten or direct to websites that aren’t IRS.gov.
• Threaten to call law enforcement or immigration officials.
• Take your citizenship status, driver’s license or business license.
• Mail tax debt resolution advertisements.

To protect against taxpayer identity theft, the IRS recommends:

• Using current security software (firewalls, virus/malware protection, file encryption). Make sure it updates automatically.
• Treating personal information like cash. Don’t leave it lying around.
• Using strong, unique passwords and 2-Factor Authentication.
• Avoiding phishing scams and malware that often come in emails that appear to come from a trusted source and emails with urgent messages.

When preventative measures fail, insurance is available to help victims through the often expensive and time-consuming process of recovery. Please contact us if you would like more information about insurance specifically designed to protect against identity theft.