Asset ProtectionMarch 8, 2018

How to Prevent Tax Fraud and Identity Theft

By: Hazen Law Group

Fraudulent tax returns and stolen refunds have always been cause for concern for Pennsylvanians and all Americans.

But after last year’s giant Equifax security breach, all taxpayers should exercise extra diligence. As a result of the breach, hackers were able to access the Social Security numbers, addresses, and birth dates of virtually all Americans who had ever obtained a loan or credit card.

The IRS is working to implement enhanced security measures to protect taxpayers. And, in fact, they tout an apparent decline in identity theft in recent years. However, the real fallout from Equifax may be yet to come, and the IRS cannot always be counted on to react quickly. Read on to learn about how to protect yourself from identity theft as a taxpayer.

More refund, more exposure
A hefty tax refund may make you feel good, but it can needlessly expose you to tax fraud. Moreover, new safeguards may be causing significant delays of legitimate refunds in some cases, leaving you waiting around for money you need. If you expect a large refund, consider adjusting your withholding by revisiting your Form W-4. Doing so will not only get your money into your own hands faster, but it will help keep it away from thieves.

Monitor your IRS account
The IRS offers a free online tool taxpayers can use to monitor their individual accounts. Doing so will allow you to watch out for false returns filed in your name or refunds paid out. Signing up for access is laborious by some accounts, and the service is only available during certain hours.

File early
The earlier you file, the less time a scammer has to file a false return or go after your refund. Naturally, you need to file your taxes carefully and completely. But this year and in future years, a little advance preparation can help you stay ahead of the crooks.

Identity Protection PIN
An Identity Protection PIN, or IP PIN, is a six-digit code which is assigned by the IRS and aims to prevent fraudulent tax returns from being filed in your name. In general, the IRS only allows actual victims of identity theft to participate in the program. This does not encompass all victims of the Equifax breach or other data breaches. However, all taxpayers who last year filed in Florida, Georgia, or Washington, D.C. may participate in an IRS pilot program expanding the use of IP PINs.

Telephone scams
Telephone robo-calls claiming to be the IRS and demanding immediate payment are a longstanding scam. Anecdotally, there seems to be a recent uptick in these calls. Remember, the IRS will never call without first mailing you a bill, nor will they demand payment by phone or threaten to have you arrested. If you receive a call like this, hang up.

Legal assistance for identity theft
Security from tax fraud, identity theft, and stolen refunds is more challenging than it used to be. A balance of prevention and diligent oversight is necessary to keep yourself safe. If you or a loved one are victims of identity theft, call Hazen Law Group today.

There is a path to a secure future for you & your family.