Tax return identity theft is becoming increasing more common—the latest General Accounting Office (GAO) report says that IRS paid out over $5.8 billion in fraudulent returns in 2013. The IRS does have security measures in place to verify the accuracy of tax returns and the validity of Social Security numbers submitted, but that hasn’t stopped the bad guys from filing returns using other people’s identities — early and often!
The longer you wait to file your return, the more opportunity there is to have an identity thief fraudulently file a return in your name. Therefore, filing your return early as soon as you receive all of your tax documents may help prevent you from becoming a tax return identity theft victim.
Many people mistakenly assume you must pay your taxes at the same time you file your return, so they put off filing until the last minute. Keep in mind, just because you file early, doesn’t mean you have to pay any taxes you owe early. You have until April 18, 2016 to pay any taxes due to the IRS, regardless of how early you file.
If you receive a notice from the IRS that leads you to believe someone may have used your Social Security number fraudulently, or if your electronic filing is rejected, you should notify the IRS immediately by calling the IRS’ Identity Protection Specialized Unit (IPSU) at 800.908.4490. For the IRS to mark your account to identify any questionable activity, you must complete Form 14039, Identify Theft Affidavit. Mail or fax the form (one or the other, doing both will result in a delay) to the address or fax number listed on the form.
The IRS is well aware of the uptick in fraudulent filings and is making efforts to prevent it, such as monitoring Internet “IP” addresses where multiple returns are filed and keeping track of the time it takes to fill out each return online. Scammers prepare returns in rapid succession, unlike most taxpayers, who typically put in time to make sure the information on their return is correct.
The IRS is also attempting to increase protection with a personal pin number for taxpayers, known as an “IP PIN”—an identity protection pin.
An IP PIN helps the IRS verify a taxpayer’s identity when filing an electronic or paper tax return. When you have an IP PIN, it prevents someone else from filing a tax return with your SSN.
If a return is e-filed with your SSN and an incorrect or missing IP PIN, the IRS will reject it until you submit it with the correct IP PIN or you file on paper. If the same conditions occur on a paper filed return, the IRS will delay its processing and any refund you may be due for your protection while they determine the legitimacy of your identity and return.
Many people feel safer having a licensed professional, such as a CPA, prepare their tax returns. CPAs are licensed by the states, abide by a professional code of ethics, and maintain annual continuing education. Local pop up tax shops are much more likely to be scammers looking to take advantage of taxpayers. You can find certified tax preparers on the IRS website here. For a consultation with a Dallas CPA, contact us today.
