IRS Publishes its Taxpayer Guide to Identity Theft

Transcript of Podcast Episode 194

Hello this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode, the IRS pushes back against identity theft.

The problem of identity theft has grown more acute since the start of the pandemic over two years ago.  In 2021, the Federal Trade Commission processed 15,374 email or social media identity theft reports, a 9 percent increase from 2020.

The IRS has taken notice.  Earlier this year they issued a publication, their “Taxpayer Guide to Identity Theft,” where they suggest that taxpayers should be alert to possible tax-related identity theft if:

1. You get a letter from the IRS inquiring about a suspicious tax return that you did not file.
2. You can’t electronically file your tax return because of a duplicate Social Security number.
3. You get a tax transcript in the mail that you did not request.
4. You get an IRS notice that an online account has been created in your name.
5. You get an IRS notice that your existing online account has been accessed or disabled when you took no action that would cause it.
6. You get an IRS notice that you owe additional tax or refund offset, or that you have had collection actions taken against you for a year in which you did not file a tax return.
7. IRS records indicate you received wages or other income from an employer you didn’t work for.
8. You’ve been assigned a Tax ID number but you did not request one.

The IRS recommends that if you suspect you are a victim of identity theft, continue to pay your taxes and file your tax return, even if you must file a paper return.   They also have some other suggestions, including:

• Respond immediately to any IRS notice and call the number provided on the correspondence.
• If your electronically filed return is rejected because of a duplicate filing under your Social Security number, the IRS recommends that you complete and file IRS Form 14039, which is their “Identity Theft Affidavit.”
• They also suggest visiting IdentityTheft.gov. This will give you the steps you need to take right away to protect yourself and your financial accounts.

As far as corporate data breaches go, the IRS is quick to remind us that not all data breaches result in tax-related identity theft. It’s important to know what type of personal information was stolen.  More often than not, in cases involving the IRS, the taxpayer’s Social Security number is part of the breach.

If you’ve been a victim of a data breach, they suggest that you keep in touch with the company to learn what it is doing to protect you.  They recommend you file an Identity Theft Affidavit only if your Social Security number has been compromised and your electronically filed return was rejected as a duplicate or the IRS instructs you to file the form.

With regard to phishing emails and scams, the IRS recommends following the advice of the Federal Trade Commission.  The first step is learning to recognize phishing emails and text messages.  The FTC also provides four steps you can take to protect yourself:

1. Protect your computer with security software, and make sure the software updates automatically to adjust for any new security threats.
2. Protect your cell phone by allowing it to update its software automatically. These updates could give you critical protection against security threats.
3. Protect your accounts by using multi-factor authentication. Multi-factor authentication makes it more difficult for scammers to log in to your accounts if they somehow get a hold of your username and password.

And finally…

4. Protect your data by backing it up. The FTC reminds us that you need to make sure that those backups aren’t connected to your home network. They suggest copying your computer files to an external hard drive or cloud storage. It’s also a good idea to back up the data on your phone as well.

The problem of identity theft isn’t going away anytime soon, and in this case, the IRS and FTC seem ready to help any way they can.

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