Identity theft often starts when someone’s personal information is stolen or lost. Identity thieves may then misuse a taxpayer’s identity.
I am presently dealing an identity theft case, wherein my client was unaware that his identity was stolen. He was working in New Jersey and when he was laid off, he applied for unemployment benefits. To his astonishment, it was denied and he was informed that, as per the Social Security Administration office records he is working and not eligible for unemployment benefits. In the meantime he got few notices from the Internal Revenue Service informing his tax liability and approached our organization for help.
On verification of his case, it came to light that his identity theft occurred few years back and using his identity someone else had requested for SSN and used it to get job. The client is staying in New Jersey but as per the reporting to IRS he is working in four to five states of US including NJ and is liable for tax deficiency for not reporting his income from other states. His individual tax refund requests for last five years were kept in abeyance and the innocent taxpayer did not dare to contact IRS for his refund.
The fastest growing crime is Identity theft, which is happening nationwide and it’s the biggest challenges being faced by the IRS. More cases are reported during the tax-filing season wherein the identity thieves obtain the information and they themselves claim as the real person and file tax returns and try to get the refunds at the start of the tax-filing season and the innocent taxpayer is unaware that his tax returns using social security number has already been filed.
Misuse of Social Security Number, financial information to obtain tax refund or social security benefits or other benefits are crimes which is increasing. Now we see more use of SSN of young children or older taxpayers who don’t file their tax returns.
Some phony tax preparer gives information of SSN and other personal information to criminal gangs. Some cases of obtaining the information from health care providers and insurance agents have emerged.
In Georgia, one Senior lady under care in a nursing home, her identity was stolen by a nursing home employee resulting in curtailment of Social Security Benefits, Food Stamps and medicare benefits. The senior had to undergo emotional pain for being in nursing home and lost the trust of care-taker apart from the pain of losing her personal information.
Seniors 65 years or older normally don’t file the tax returns as their income for tax year is less than $11,500 for single, and $22,400 for married filing status. Depending upon the filing status, age and income etc most seniors don’t file the tax return. Criminal gangs who are in possession of their financial information and SSN, file tax returns on their behalf and claim huge refunds whereas the innocent senior tax payer is unaware of such tax returns. Most of the cases which are on rise in the State of Florida especially South Florida.
Every citizen even if he doesn’t have to file a return, should file the Federal Income Tax at-least to get the refund of Tax withheld. They can approach the Tax Counseling for the Elderly or Volunteer Income Tax Assistance program locations which offers free tax help. They are the IRS-certified volunteers who provide tax counseling associated with non-profit organizations that receive grants from the IRS.
Other way of Identity theft is obtaining the information from Death Master file. IRS is aware of the same. Some recommendation to limit access to death master file and release of same after three years, retire the SSN after three years are under consideration. Death master file information may be released to institutions/companies which have legitimate needs, lock the file once the final returns are filed are under consideration.
In one case involving a wealthy married couple, the husband expired. Deceased husband’s information was used to file tax return along with another male person. IRS got suspicious and withheld the refund. Wife of the deceased without knowing about the same later filed her joint return and wanted to pay the amount owed to IRS. Her return e-filed was rejected by IRS. She was worried as if the returns are not filed in time, she would be subjected to penalties and late filing fees.
Internal Revenue Service has taken Identity theft as its top priority and around 3000 employees are working to deal with the biggest challenge.
Tips to protect being victim of identity theft
Social Security Card or any document that include information about your SSN should not be carried.
Ask Businesses that ask for SSN, it they really need your personal information.
Monitor your bank accounts daily if possible.
Report lost or stolen health insurance identification cards.
Review your health insurance explanation of benefits statement each month.
Examine card readers for skimming devices when buying gas at the pump
Don’t add people you don’t know on Facebook
Check your Facebook privacy settings
Put minimal personal information on resume when job hunting.
Opt out of prescreened credit card offers.
Check your credit reports provided free by each credit reporting agency every 12 months. Monitoring your credit report is the best way to spot sings of identity theft, such as errors and suspicious activity and accounts or addresses you don’t recognize.
Secure your personal information.
Don’t use the same password for all accounts.
If you are using computers use firewalls and anti-spam/virus software and changing passwords for internet accounts frequently.
Avoid giving your personal information over phone, mail or internet unless you initiated the contact.
Try to file tax returns early.
Go to post office and post the tax returns instead of keeping the same outside in the mailbox.
IRS doesn’t send emails or gives you a call. If someone is calling you, claiming himself from IRS, please put the phone down.
Don’t put house address on websites.
Don’t reroute your direct deposit.
Open your mails instead of keeping it fearing its from IRS.
Things to do if victim of Identity theft.
If you receive a notice from IRS mentioning receipt of more than one tax return, respond to the number quoted in the notice.
If your refund has been offset against a previous years tax return which you have not yet filed contact IRS.
Based upon income reported to IRS, your federal benefits have been reduced or cancelled.
If you feel you are a victim of Identity theft, contact IRS Identity Protection Specialized unit at 800-908-4490, extension 245 right away so that IRS could take steps to secure your tax account and match your SSN.
Also, fill out the IRS Identity Theft Affidavit and submit to IRS. IRS will investigate and try to settle the issue within six months period.
In addition, it’s recommended to:
File a report with local police.
Report incidents to FTC Identity Theft hotline @ 877-438-4338.
Report incidents to OIG hotline number @18002690271
Contact fraud department unit of credit bureaus.
Close any accounts that have been tampered with or opened fraudulently
Lock electronic access to the account by visiting ssa.org
Report to Internet crime complaint center about ID theft.
Change of SSN is not advised, otherwise it’s a fresh start which is not an easy way. SSN is linked to various agency and it’s not easy to approach each agency and inform about change of SSN. Private companies have old SSN and you have to explain the reason for change of SSN. Credit reporting agencies are to be informed in case of change of SSN. Knowledge based questions may be used to reduce fraud.
I am a volunteer with Northeast New Jersey Legal Service providing assistance at our low income tax clinic.
T. Rinu Cherian