Biz Bulletin: How to avoid problems with tax identity theft

Biz Bulletin: How to avoid problems with tax identity theft

January 31st, 2014 by By Jim Winsett in Business Diary

Jim Winsett

Jim Winsett

Photo by Contributed Photo /Times Free Press.

Q: With so much ID theft being mentioned in the news lately, I want to be sure to get my taxes done early. I don't want any scammer to claim my refund. Does the BBB have some tips for this year's tax filing season?

A: Thousands of Americans are eligible to receive refunds from Uncle Sam in 2014, and it is not just Certified Public Accountants that will be busy; tax season is primetime for identity thieves. With all of the personal information contained in tax documents, cons will try every trick in the book to obtain these documents in order to get Social Security numbers and intercept refunds.

Tax identity theft happens when someone uses your social security number to get a tax refund or job. According to a recent Treasury Inspector General Report, the Internal Revenue Service paid billions of dollars in fraudulent tax refunds to individuals who used a stolen social security number to complete a claim in 2012.

According to the IRS, nearly 1,500 tax identity theft related criminal investigations were launched in 2013--an increase of 66 percent from 2012. To protect consumers, the IRS, FTC and BBB have expanded efforts to educate taxpayers and help victims.

Unfortunately, many tax identity theft victims don't discover that their social security number has been stolen until they file their taxes. Then, it often takes several months before victims receive their rightfully owned tax refund. Be alert and contact the IRS immediately, if you receive a notice from the agency that states:

* More than one tax return for you was filed

* You have a balance due, refund offset or have had collection actions taken against you for a year you did not file a tax return

* IRS records indicate you received wages from an employer unknown to you.

BBB also advises individuals to look out for crooked tax preparers during this time of year. Some complaints BBB has received in the past indicate that the preparer filed their tax return without permission or demanded high fees to obtain the refund. In other complaints, individuals alleged paying for services they never received.

To prevent tax identity theft, BBB and the FTC offer the following tips:

* File your tax return early in the tax season, if you can.

* Use a secure internet connection if you file electronically, or mail your tax return directly from the post office.

* Don't leave W-2s in unsecure locations like offices or cars. Shred copies of your tax return, drafts, or calculation sheets you no longer need.

* Respond to all mail from the IRS as soon as possible.

* Know the IRS won't contact you by email, text, or social media. If the IRS needs information, it will contact you by mail.

* Don't give out your Social Security number (SSN), or other sensitive personal information, unless absolutely necessary and only to persons you can verify are with a reputable company.

* Research a tax preparer thoroughly before you hand over personal information. You can start at, and look up a company's BBB Business Reviews to find information on tax preparers' licensing, complaint history, BBB rating and more.

* Check your credit report at least once a year for free at to make sure no other accounts have been opened in your name.

If you think you've become a victim of tax identity theft:

* Contact the IRS Identity Protection Specialized Unit immediately at 1-800-908-4490. According to the Federal Trade Commission, specialists will work with you to get your tax return filed, get you any refund you are due, and protect your IRS account from identity thieves in the future.

* Ask one of the three credit reporting agencies (Equifax, Experian, TransUnion) to place an initial fraud alert or even a freeze on your credit report. This makes it harder for fraudsters to open any accounts in your name.

* Create an identity theft report by filing a complaint with the FTC at and filing a local police report. Together, this will help you to get fraudulent information removed from your credit report and to stop companies from collecting debt that an identity thief created.

Remember, the Internal Revenue Service will never initiate contact by email, text or social media; if information is needed, the organization will make contact and clearly verify the identities of contractors.

For more information on identity theft and additional tips on how to combat scams, FTC's Identity Theft Guide

Jim Winsett is president of the Better Business Bureau in Chattanooga.