With tax season approaching rapidly, it is important to be safe instead of sorry.
In 2011, according to the U.S. Treasury Department Inspector General's Office, the IRS reported that of the 2.2 million tax returns it found to be fraudulent, about 940,000 totaling $6.5 billion were related to identity theft.
George J. Russell, the Treasury inspector general, estimates that fraudulent tax returns by stealing people's identities could reach $26 billion over the next five years. For the tax year 2010, 48,357 Social Security numbers were used multiple times as a primary taxpayer identification number.
What is identity theft? It occurs when someone uses your personal information such as your name, Social Security Number without permission, to commit fraud or other crimes. In most instances, identity thief reports false income and withholding to generate a fraudulent tax return. The thefts know that the IRS does not verify the W-2 information until after the refund is issued.
How do you know your identity has been stolen? You may not know until you file your return. The IRS will send a letter that a return and a refund have already been filed. The letter from the IRS will state that more than one tax return for you was filed or the IRS has records that indicate you received wages from an employer unknown to you.
What to do if your tax records were affected by identity theft? If you receive a notice from the IRS, respond immediately. If you believe someone may have used your Social Security Number fraudulently by responding to the name and number printed on the notice or letter. You will need to fill out the IRS Identity Theft Affidavit, Form 14039. This form can be found on the IRS website, www.irs.gov. If you have not achieved a resolution, you may contact the IRS Identity Protection Specialized Unit at 1-800-908-4490.
How can you protect and minimize the chance of becoming a victim?
Don't carry your Social Security card or any documents with your Social Security Number on it.
Don't give a business your Social Security just because they ask.
Check your credit report every 12 months.
Don't give personal information over the phone, through the mail or on the Internet unless you have initiated the contact. The IRS does not initiate contact with taxpayers by email to request personal or financial information.
Neil Shnider is a special projects consultant that focuses on business growth through finding new markets and new products/services, increasing profits and trimming costs for the Small Business Development Center at Florida Gulf Coast University. He can be reached at the SBDC center or at email@example.com Go to www.theshnidergroup.com for more small business information and tools.
The SBDC provides small business consultants, at no cost, to guide you through many of the business processes. These are experienced professionals who are working to benefit small businesses. The service is at no charge. Call 239-745-3700 for an appointment.