Tax identity theft poses a significant risk to individuals, potentially leading to financial losses and endless stress and work trying to fix it. Criminals who gain access to Tax Identification Numbers (TINs) can file fraudulent tax returns before victims even realize their identities have been stolen. These crimes have become more commonplace in recent years.
This article explores the vulnerability of TINs to identity theft and guides what steps individuals should take if they fall victim to tax identity theft.
The Vulnerability of TINs
Tax Identification Numbers, such as Social Security Numbers (SSNs) and Individual Taxpayer Identification Numbers (ITINs), are valuable targets for identity thieves. These numbers serve as unique identifiers for taxpayers and are required when filing tax returns. Unfortunately, if scammers gain access to someone’s TIN, they can exploit it by filing fraudulent tax returns and potentially receiving tax refunds or credits in the victim’s name; criminals can now do this process extremely quickly via online tax filing services.
Unfortunately, many people’s TINs have already been compromised in data breaches.
One common tactic tax identity thieves employ; filing early in the tax season before victims become aware of the theft. By beating legitimate taxpayers to the filing deadline, scammers aim to claim refunds or credits, making it difficult for the victims to obtain their rightful tax benefits.
Furthermore, stolen TINs can be used for other types of fraud, such as opening credit accounts or applying for loans. The consequences of tax identity theft can be long-lasting and quite painful for the victim.
What to Do if You Become a Victim of Tax Identity Theft
If you suspect or discover that your TIN has been compromised and used for tax identity theft, it is crucial to take immediate action. The following steps can help mitigate the damage and initiate the resolution process:
- Contact the Authorities: report the incident to the Internal Revenue Service (IRS) by filing Form 14039, Identity Theft Affidavit. Additionally, file a police report with your local law enforcement agency to establish an official record of the identity theft.
- Notify Credit Reporting Agencies: contact the major credit reporting agencies, such as Equifax, Experian, and TransUnion, to place a fraud alert on your credit report; this can help prevent further fraudulent activity.
- Monitor Financial Accounts: Regularly review your bank and credit card statements and other accounts for unauthorized activity. Report suspicious transactions immediately to the respective institutions.
- Source Professional Assistance: Contact an experienced identity theft lawyer specializing in tax identity theft cases. These professionals will guide you through the complex process of resolving tax identity theft, dealing with creditors, and clearing your name.
- File an Identity Theft Report: complete an Identity Theft Report with the Federal Trade Commission (FTC) to create an official record of the incident. This report can be valuable when dealing with creditors and resolving any resulting financial issues.
- Respond to IRS Notices: If you receive any correspondence from the IRS regarding tax returns or refunds that you did not file, respond promptly and follow the instructions provided. The IRS has specific procedures in place for resolving tax identity theft cases.
Safeguarding Against Identity Theft
While there are some preventive measures to take to safeguard your sensitive information, such as your TINs, criminals can find loopholes and still gain access. If you’ve become a victim of tax identity theft, taking immediate action and getting professional assistance from an identity theft attorney is crucial.
By being proactive and working with proper professional guidance, you can mitigate the potential damage caused by identity theft and begin restoring your financial and personal security.