Identity Theft

 

IRS expands identity theft efforts, but you still need to protect yourself. Although the IRS is working harder than ever this year to prevent identity theft and stop the filing of fraudulent tax returns it’s still important that you protect yourself for those who would use your identity to enrich themself’s by using your identity or personal information.

The IRS has more than doubled the number of employees from last year to more than 3,000, who work on identity theft cases. It is working to reduce the 180 days it currently takes to resolve most cases. For 2013, the IRS’s expanded efforts include (1) increasing the number and quality of screening filters that spot fraudulent returns before refunds are issued, (2) additional IRS criminal investigations, (3) expanding the pilot program that allows local law enforcement agencies in nine states to obtain tax return data and assist in investigations, and (4) collaborating with more than 130 financial institutions to identify fraud schemes and block refunds from reaching the hands of thieves.

If you think this means you are protected think again. Treasury Inspector General for Tax Administration noted that the IRS reported that it detected 938,664 tax returns totaling $6.5 billion in fraud in 2011 tax year. These fraudulent returns meant delays for tax payers expecting refunds of up to 12 months. Worse yet the same information used to produce a fraudulent tax return can be used to open credit card accounts, borrow money and generally wreak havoc on your credit and your life.

So how do your protect yourself?   While there is no sure fire way to make sure you will not be a victim of identity theft you can take steps to reduce the chance of it happening to you.

Step one don’t make your personal information available to others. This mean don’t post your date of birth, city of birth, College or other information on the internet. FaceBook, Google and the many other social media sites are not your friend when it comes to protecting your ID.

Step two don’t give your social security number to just anyone, while this number is needed by your employer and bank and investment firm it should not be used as identification for other things or shared with others through unsecured email, treat it like the important key it is. Think of your social security number as a key to your credit, with it and a little other personal information a criminal can get access to your credit and your reputation.

Step three; don’t use a tax shop that just pops up when tax time rolls around. These tax firms that pop up at tax time can afford to work cheap because there is so much money to be made from the information they collect (not in any good ways).  You should also beware of anyone that offers to take the fee out of your refund.  Your tax refund should go to your account and not to the address or account of a tax preparer or his bank. Find a professional that has been in business for some time (the longer the better) and whose office is open year round. Get a referral from a friend or associate you trust. If the tax preparer won’t sign your return once complete and does not include his PTIN (preparer ID) on the completed return not only should you not use them but you should also report them to the IRS. The only tax professionals currently subject to IRS regulation and supervision are Enrolled Agents (EAs), Certified Public Accountants (CPAs) and Attorneys.  These professionals are subject to IRS circular 230 which governs rules of conduct, continuing education and more.

Step four; don’t leave your information lying around. Keep copies of tax returns and other important information locked up and out of sight of those that may wish to steal it. Don’t throw bank statements, credit card statements, insurance cards or other forms in the trash where anyone can get them.  Shred these documents before throwing them away.

Step five keep an eye on your bank accounts and credit reports. Check your bank and investment account statements monthly; report any transactions that you don’t recognize.  Review your credit report regularly; if someone is checking your credit that you don’t recognize find out who they are and why they requested the information.

These five steps will help to safe guard your information and make you aware if your identity is compromised.  If you find a problem or if your identity is stolen file a police report as soon as you are aware. Although the police may not be able to do much to help, having the report on file goes a long way to protect you from becoming responsible for the thief’s activities. You should also report theft of suspicious activity to your bank and credit card providers right away if you find or suspect a problem.