If you’re concerned about becoming a victim of identity theft during tax season, you’re not alone. Identity thieves jump at the opportunity to use stolen information to file fraudulent tax refunds. And, although the IRS will eventually send you your money, becoming a victim of id theft means the refund process could get significantly delayed while investigators determine which was the fraudulent filing.Luckily, there are some precautions you can take to minimize risks and strengthen your security measures:
- Adjust your withholdings: One option that Money Magazine suggests is to adjust your tax withholding so you only get a small refund. You’ll have less to lose in the case of a fraud incident. If you’re relying on a large refund, you’ll be more vulnerable to financial hardship as the result of any tax fraud that might occur.
- Don’t fall for tax-season scams: Keep in mind throughout tax season that the IRS will never contact you by phone or email to solicit important information. Scammers will sometimes contact people and pretend that they have outstanding tax refunds to claim, debts to pay or a pending investigation. Criminals can even imitate the IRS toll-free number on your caller ID and may have access to the last four digits of your Social Security number. If you think the IRS may really be trying to contact you, call them back from a separate line and make an inquiry.
- Double-check your preparer: According to the IRS, three in five Americans will consult with a tax preparer this year for help filing. Just make sure you verify your preparer’s credentials, as some thieves will pretend to be professionals in order to steal your identifying information or flee with your refund. Check that your preparer has a preparer tax identification number from the IRS. Then, check with the Better Business Bureau to make sure all the licenses are in order and to check for any complaints against that individual. “You want someone with a license, a reputation, a permanent shop,” a certified public accountant and accounting professor told Money Magazine. “You’re giving this person all your information: your Social Security number, your bank routing number.”
The IRS has also established a new security method to help prevent tax fraud. The IRS assigns eligible taxpayers an identity protection (IP) PIN, which is a six-digit number that is unique to you and must be used to file your tax refund. This strengthens security because an identity thief would have to know the IP PIN in addition to your name and Social Security number.
You’re eligible to receive an IP PIN if you filed your tax return last year in Georgia, Washington D.C. or Florida. You can also get a PIN if you received a letter in the mail inviting you to sign up for one, and the IRS only sent these out to individuals they believed had already been the victim of id theft. To get an IP PIN, visit www.irs.gov/getanippin armed with your date of birth, Social Security number, filing status, email address and the mailing address from your most recently filed tax return.
“The PIN is a great idea,” one accountant told News-Press. “The only struggle that I see getting this PIN is that it’s not that simple.”
Of course, completely preventing identity theft may not be possible, so it’s important to keep an eye on your mail and bank accounts and stay alert for any unusual activity that may indicate fraud.