To increase the awareness of tax-related identity theft, the FTC has declared this week, “National Tax Identity Theft Awareness Week”.
Identity theft during tax season – whether through tax return theft or a different income-related form of fraud – is a growing problem. However, CPA’s can not only help their clients take steps to prevent this crime from taking place but also help them alleviate the damage and minimize the after effects of the crime once it has taken place.
This form of theft happens when an individual’s personal identification information, such as their name and Social Security number, are used to collect tax refunds by filing before the victim. Once they have this information, the thieves can use it to commit even more crimes after filing, including opening up new lines of credit or other accounts in the victim’s name, leaving them to deal with the debt and damaged credit score.
Should a CPA be asked by their client what to do in the case of ID theft, here is a brief rundown of the standard protocol:
- Report the theft to the Federal Trade Commission at 877-438-4338, ftc.gov/complaint or TTY 866-653-4261
- File a report with the local police
- Close any affected bank and credit card accountsInform the credit bureaus and consider putting a credit freeze on the accounts
- Contact the IRS Identity Protection Specialized Unit at 800-908-4490, and complete Form 14039, if necessary
- Respond to all IRS notices immediately using the name and number printed on the notice.
It’s impossible to prevent the occurrence of identity theft 100 percent of the time, but if you monitor credit reports and keep tabs on all of your statements, you have a better chance of spotting this theft in time to take appropriate steps.