Global Tax Insights
IRS Responds to Growing Problem of Tax Identity TheftNovember 23, 2015
The IRS is increasingly vigilant when it comes to tax identity theft—something that has become a huge problem in recent years.
Out of the almost 9 million cases of identity theft in America every year, tax related identity theft is the most common form. As exampled in a blog we posted last year: “Tax Question of the Week: Someone Filed a Tax Return in My Name and Received a Refund. Now What?”
Tax identity thieves are not easily identified because of the sensitive information contained on tax returns. The recent breach of the IRS’ “Get Transcript” service resulted in 334,000 taxpayer account hacks after criminals used social security numbers, addresses, and other personal data garnered from social media sites and other sources to breach the system’s multistep verification process. If you receive a phone call, letter, or email regarding your tax returns, contact your tax adviser immediately.
New IRS protections
The IRS has responded to the growing problem and is taking a proactive stance against it as of late. The IRS has or is considering actions such as:
- Offering free credit monitoring services
- Offering identity protection personal identification numbers (PINs)
- Mail over 170,000 letters to taxpayers whose information was not stolen, letting them know that though criminals were unsuccessful in accessing the IRS system using their personal information, they could still be at risk elsewhere.
- (Starting 2017 tax season) allow only one 30 day extension of W-2 filings by employers. Previous law (that will expire after 2016 tax season) allowed employers to request up to 60 additional days to file W2’s. The lack of available W2 information makes if much more difficult for the IRS to detect false tax returns and refund fraud.
There are a few ways you can lessen your chance of getting involved in a tax identity scam. The IRS advises that you:
- Always be on high alert for tax scams—and do not put any confidential information on social media sites!
- Take a moment to assess a situation before you give someone your information whether over the phone, via a letter, or through an email.
- Alert your older relatives who are prime targets for fake IRS phone calls and letters.
- Immediately contact your tax adviser if you are having trouble deciding if an IRS or state inquiry is legitimate.
Protecting yourself and loved ones from tax identity theft depends on carefully guarding yourself personally and on social media sites. Use caution and good judgment when it comes to the calls, emails, and letters you are receiving.