Warning signs: Potential fraud and scams
Tax-related identify theft involves someone using a stolen Social Security number to file a tax return and claim a fraudulent refund. This is a small but growing occurrence, and if it happens to you, it can have a major impact on your financial life and delay payment of a tax refund on which you may have been depending.
How do you know if someone has obtained and is using your Social Security number in a tax-related identify theft? Here are some warning signs:
- The IRS or your tax professional notifies you that more than one tax return has been filed for you based on your Social Security number.
- The IRS or your tax professional indicates that you owe additional tax, have a refund offset, or have had collection actions taken against you for a year you did not file a tax return.
- The IRS notifies you that you received more wages than you have indicated on your return and the wages are from an unknown employer. (Someone may have used your Social Security number to obtain a job, and those wages are now reported on your number.)
- Your state or federal benefits are reduced or cancelled because the paying agency received information reporting an income change.
In the past, some unscrupulous tax preparers have directed client tax refunds into the tax preparer’s account. To help avoid this situation, beginning in 2015, the IRS will limit the number of direct deposit refunds to any one financial account or prepaid debit card to three.
For any subsequent valid refunds, the IRS will prepare a paper check and postal mail it to the taxpayer. This provision may affect larger families where parents and, perhaps, minor children would like to direct tax refunds into the same financial account, so plan accordingly.
What to do about tax-related identity theft
If you suspect your personal information has been used fraudulently, take these steps as quickly as possible:
- File a report with your local police department.
- File a complaint with the Federal Trade Commission at consumer.ftc.gov. Or call the FTC Identity Theft hotline at (877) 438-4338, TTY: (866) 653-4261.
- Contact one or all three of the major credit bureaus to place a fraud alert on your account:
- Equifax: Equifax.com (800) 525-6285
- Experian: Experian.com (888) 397-374
- TransUnion: transunion.com (800) 680-7289
- Close any accounts you know have been tampered with, accessed, or opened fraudulently.
Further, if your Social Security number has been compromised and/or you suspect you may be a victim of tax-related identity theft, take these additional steps:
- Respond immediately to any IRS notice you receive; typically there will be a number provided on the notice, which you should call as soon as possible.
- Complete IRS Form 14039, Identity Theft Affidavit. Use the fillable form available on irs.gov and mail or fax it to either the address or number provided in the instructions.
- Pay any taxes you owe and file your tax return. You may need to file your income tax return by paper rather than electronically.
If you previously contacted the IRS but still have no resolution, contact the Identity Protection Specialized Unit at (800) 908-4490.
Be sure to record the dates on which you made phone calls or sent letters. Keep copies of all correspondence (written or electronic) in a file for your records and protection.
This article was written by/for Wells Fargo Advisors and provided courtesy of Kim Sisul, First Vice President – Investment Officer in Portland, OR at 503-220-6000.
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