The U.S. Internal Revenue Service launched a new unit this month to tackle the rising rate of online identity theft. About a dozen agents based in Washington, D.C. will focus on cybercrime related to tax fraud, including criminals who use stolen Social Security numbers to submit tax returns and collect fraudulent refunds. Often victims discover their identities have been stolen when they file their tax return and are told that two returns have been filed using the same SSN. The Wall Street Journal reported May 5, 2015, that more than $26 million has been traced to criminal groups in Nigeria, Russia and other Eastern European countries.
If you receive a notice from the IRS that suggests you may have been a victim of identity theft, take action right away:
- Review the IRS publication "Identity Theft Information for Taxpayers." In addition, the Federal Trade Commission’s booklet on “Taking Charge: What to Do if Your Identity is Stolen” offers detailed advice to identity theft victims.
- As recommended by the IRS and FTC, file a police report with your local police or sheriff’s department. Credit agencies will generally waive fees associated with long-term fraud alerts if a report has been filed.
- Call one of the credit reporting agencies to place a temporary fraud alert on your credit report, which is good for 90 days and then must be renewed. The alert tells creditors that there is possible fraud associated with your account, and they must take steps to verify the identity of anyone attempting to open new credit.
- www.Equifax.com 1-800-525-6285
- www.Experian.com 1-888-397-3742
- www.TransUnion.com 1-800-680-7289
You may want to place a credit freeze
on your account. Security freezes and thaws are generally free for identity theft victims. Non-victims may have to pay a fee to each credit bureau to implement a freeze. Having a credit freeze will require a little more advanced planning if you want to open new credit; i.e., opening store credit cards on an impulse will not be an option. You will need to request a temporary “thaw” with all three credit bureaus to allow lenders to access your reports, which takes about twenty minutes online.
- Consider cyber-squatting on your IRS information. The IRS maintains an on-line process to request a “record of account” for taxpayers to view/print previous tax returns and other related information. In some cases, criminals have hacked this system using legitimate taxpayer personally identifiable information to obtain the information necessary to file false tax returns and claim bogus refunds. You may want to preempt others from accessing your tax information by “cyber- squatting” on the site by setting up a user name and password to preclude others from doing so. Go to http://www.irs.gov/Individuals/Get-Transcript. Select the first option to get your transcript online.
Be sure to respond immediately to any IRS letter by calling the number provided on the notice. Like the credit union, the IRS will not initiate contact with you by email, text or social media to request personal or financial information.