Each year thieves try to steal billions in federal withholdings by stealing your identity. As the IRS focuses more attention on this quickly growing problem, now is the time of year to be extra vigilant.
Early tax filing season is the worst time
Your federal tax account at the IRS currently has plenty of money withheld from your paycheck during the course of the year. Until you file your tax return, the IRS is not sure if it needs to pay some of it back to you in the form of a refund.
Thieves know this too, and will try to file a fraudulent tax return before you have time to submit your own. When thieves file early, they can steal some of your withholdings and be long gone by the time you file your own tax return.
What you can do
- Beat them to the punch. The sooner you file your tax return, the less likely a thief will beat you to your refund.
- Get an Identity Protection PIN. All taxpayers who can verify their identity can get an Identity Protection PIN (IP PIN) from the IRS. The IP PIN is a six-digit code known only to you and the IRS that helps prevent identity thieves from filing fraudulent tax returns. If you want an IP PIN, visit irs.gov/IPPIN.
- Check your credit reports. See if there is any suspicious activity on your accounts and on your credit reports.
- Protect your ID. Be suspicious. Never give out your Social Security Number, do not leave your credit card unattended, never give ID information to someone who calls you, use the password function on your phone, be aware of strange mail, and shred important documents. Your best defense to IRS ID theft is to use best practices to protect your information.
The IRS is becoming better at spotting fakes
If the IRS suspects something is wrong with your filed tax return they will send you a notice. If this happens to you:
- Respond immediately. Get the direct contact information from the IRS website and let them know that you have a possible identity theft problem.
- File an Identity Theft Affidavit (IRS Form 14039). This will record your problem with the IRS and they will take extra steps to ensure your account activity is coming from you and not the ID thief.
- File a police report.
- Contact the credit bureaus.
Having your tax withholding stolen and then needing to unravel this problem within the IRS is a major hassle. Try to stay vigilant and know that there are steps to help protect your tax records. Thankfully, if the IRS pays out a refund to someone stealing your identity, they are on the hook for this loss, not you.