Tax Tips and Tidbits

  • Steven R. Anderson E.A.,
  • Master Tax Advisor, H&R Block, Pawling, NY

 

This week we are talking about tax identity theft.  This is a growing problem in our area and one we have encountered many times in our office this past year.  The effects of this fraud can go way beyond a simple delay in a taxpayers refund, credit scores, bank accounts, and the taxpayer’s reputation can be affected.

  1. Just how big a problem is tax identity theft? In 2013 the Treasury Inspector General for Tax Administration (TIGTA) reported that 2,416,773 taxpayers were affected by tax identity theft.  That number nearly doubled in 2014 and is expected to rise again for 2015 returns.  In addition, the TIGTA has found that resolving a tax identity theft issue can take as long as 278 days or more!
  2. What is tax identity theft? Tax identity theft occurs when a thief uses your information to file a fraudulent tax return to steal a refund form the IRS. The victim often doesn’t learn of the theft until they file their tax return and receive a reject notice from the IRS.  A Sixty Minutes report from 2014 showed how an identity thief could six on a beach with his laptop and file 15 -20 fraudulent returns each claiming a modest refund of 2 to 3 thousand dollars.  The report stated that the IRS paid about 40% of these refunds, netting the thief a minimum of $18,000 for a mornings work!
  3. What does an identity thief need to commit tax identity thief? They only need your name, social security number, and birth date.  That’s it.  This information is readily available for purchase if you know where to look.  The Wall Street Journal reported that from 2012 to 2014 there were 803 million data breaches!  Just this week the IRS announced that its’ data breach, originally thought to affect 330,000 victims actually affected over 700,000.
  4. How to tell if you’re a victim of tax identity theft. The most common way to discover tax identity theft is when the IRS or your tax professional tells you that your electronically filed return has been rejected because yours or your spouse’s social security number has been used on another tax return. You may also be notified by the IRS that you owe additional tax for a year in which you did not file, or that you received wages from an employer for whom you did not work.
  5. What to do if you are a victim? Here is a list:
    1. File a complaint with the Federal Trade Commission at identitytheft.gov.
    2. Contact one of the three major credit bureaus to place a “fraud alert” on your credit records. Equifax 1-800-766-0008, Experian 1-888-397-3742, or TransUnion 1-800-680-7289.
    3. Contact your financial institutions, and close any financial or credit card accounts opened without your permission.
    4. Download and fill out IRS form 14039 from irs.gov. Attach the form to a paper copy of your rejected tax return and mail it to the IRS.  Refund returns from our area are mailed to: Internal Revenue Service, Kansas City, MO  64999-0002.  Balance due returns are mailed to: Internal Revenue Service, PO Box 37008, Hartford, CT  06176-7008.
    5. Continue to file and pay all your taxes, even if you must do so on paper.

Finally, the IRS has a special toll free number to call if you cannot get a resolution to your identity theft problem:  1-800-908-4490.

H & R Block · 158 RT 22 Ste C2 (Hannaford Plaza), Pawling, NY 12564

Tel: (845) 855-1241 · e-Mail: standerson@hrblock.com