Preventing Tax Identity Theft

Northern Virginia Tax Law Firm HALE BALL MURPHY, PLC on Tax ID Theft

Last Year, the Treasury Inspector General for Tax Administration (TIGTA) released a report estimating that there were 1.5 million tax returns filed using "characteristics of identity theft" in 2011. This resulted in approximately $5.2 billion dollars being refunded to criminals. Over the next five years, TIGTA estimates that the Federal Government will pay $21 billion individuals filing under a false identity. If your identity is stolen and a refund is paid to someone else, your check will be tied up with the IRS until its agents complete their investigation. This could take months or even in excess of a year from the time that the fraud is discovered.

Avoiding Being the Victim of Identity Theft

To mitigate the torrent of cash being paid out to identity thieves, the IRS has established some tips to help prevent tax filers from having their identities stolen.

Guard All Personal Data – It's important to recognize the fact that identity thieves can access your information via a variety of sources, from physically stealing your wallet or purse to hacking your online accounts. Once they have basic information, such as your full name, date of birth, and social security number, they can create a falsified tax return and electronically file it. Our tax attorneys often recommend for our Fairfax and Northern Virginia clients to invest in a diamond cut paper shredder to prevent their identities from being stolen from their trash, and to keep track of tax records.

Beware IRS Impersonators – There have been recent cases of identity thieves posing as IRS investigators and attempting to contact taxpayers via email, Facebook, and other means of electronic communications. The Internal Revenue Service will not initiate contact via email or social media. If you are contacted by the IRS and are suspicious, you should terminate the communication and attempt to call them via the phone or through their website.

Protect Information Stored on Your Computer – The IRS cautions that you protect your tax returns with a strong password while they are being prepared. Keep any physical data (i.e. papers, CDs, thumb drives) stored data under lock and key.

Learning Whether or Not You are the Victim of Identity Theft

One of the biggest difficulties in preventing identity theft is that you, as the victim, will probably not know about the crime until after the fact. Still, the timely reporting of an identity theft can help move the investigation forward so that you can get your refund sooner. If the IRS contacts you stating:

• You have filed two tax returns,
• You owe taxes for a year that you weren't required to pay taxes, or
• You were paid wages from an unfamiliar employer

You may have been the victim of identity theft.

If you believe that you are the victim of identity theft, contact the IRS Identity Protection Specialized Unit toll-free at 1-703-591-4900.