Jun 10, 201309:19 AMSmall Business, Big Ideas
with Jean Willard
Stopping tax identity theft
(page 1 of 2)
You have taken strong measures to secure your credit cards. You shred paperwork at home to be sure your trash doesn’t give any clues to your identity. Still, you could become a victim of tax identity theft.
Tax-related identity theft is a growing problem. Years ago you’d never dream that your identity could be stolen or your tax return refunds might be taken by someone else. So how can this happen?
Tax return identity theft occurs when someone uses a taxpayer’s personal information, such as his or her name and Social Security number, without permission to commit fraud on that person’s tax return. Doing so enables the imposter to claim refunds or credits he or she is not entitled to. The thief tends to find success by being the first filer (early in the tax season) to claim the W-2 information and withholdings. The perpetrator will often file before the IRS has the W-2 or 1099 forms so that he or she can submit the tax return before matching can take place.
When the true holder of the name and Social Security number files a tax return, especially if it’s filed electronically, the IRS immediately matches the name and Social Security number and can see that a return has already been filed with this identity. The second person to file then has his or her return rejected, with the explanation that another person has already filed using that name and Social Security number. If you submit the return by paper, the IRS will send you a notice indicating that more than one return has been filed for the taxpayer in the tax year. The IRS might also indicate that the wages or other information claimed did not match information submitted.