Tax Data Identity Protection

Cybercriminals target tax practitioners because you have very sensitive client data. They seek to obtain your client's personal financial information in order to file phony tax returns and claim fraudulent refunds. The perpetrator might be an opportunistic cybercriminal with access to your Social Security number (SSN) or a dishonest tax preparer you've hired to submit your taxes.

How To Determine If You’re The Victim Of Tax Identity Theft?

Tax identity theft might be difficult to detect. Scammers can avoid detection by filing their taxes early, giving them enough time to obtain their return and disappear before you notice.

Tax identity theft might be difficult to detect. Scammers can avoid detection by filing their taxes early, giving them enough time to obtain their return and disappear before you notice.

If you see any of the following warning indicators, you may be a victim of tax fraud:

  • The IRS notifies you that another return with your SSN has already been filed. If someone files taxes in your name, you will be unable to file a proper return.
  • The IRS sends you a 5071C letter. This IRS letter warns taxpayers about the risk of tax ID theft.
  • The IRS notifies you about a potentially fraudulent tax return that you did not file. The IRS may contact you and request that you verify questionable tax return data.
  • You are notified that an online IRS account in your name has been created. If someone registers an IRS account with your Social Security number but does not update your contact information, you may receive notice of the new account.
  • You are the recipient of unsolicited tax transcripts. Transcripts must be requested from the IRS by taxpayers. If someone requests transcripts in your name, you may obtain a copy.
  • The IRS has employment records that you do not recognize. Fake job records can result in larger tax refunds. Scammers may attempt to report a salary that you did not get.
  • You receive W-2 or 1099 forms from companies for which you never worked. Every year, companies are required by law to deliver these forms to their employees. If you receive one from a company for which you did not work, you may be in jeopardy.

How Does It Work?

Criminals steal or purchase your personal information. Fraudsters may only need your Social Security number and address to file taxes in your name. To access this information, they may use phishing scams or purchase stolen data on the Dark Web for as low as $2.

In some circumstances, dishonest tax preparers misappropriate your information. Even certified tax specialists may take advantage of their status and submit bogus claims in your name.

Fraudsters file false tax filings that include spurious withholding claims. The greater your tax refund, the more taxes you claim were withheld. With over 168 million individual income tax filings expected this year, the IRS does not have enough time to validate each claim before issuing refunds..

The crooks then replace your deposit details with their own. This assures that the IRS compensates them for the forged return. It also stops you from knowing whether or not your return was filed.

The IRS denies your claim when you file your taxes. This could lead to an investigation. When the IRS discovers that a bogus return was processed, it will presume your guilt until you prove your innocence.

Report Suspected Identity Theft Or Data Loss

If your clients require assistance in preventing, reporting, or recovering from identity theft, please explore the following resources:

  • Individuals
  • Businesses

You or Your Firm

If you or your company has been the victim of data theft, you must immediately:

Report it to your local stakeholder liaison:

Liaisons will notify IRS Criminal Investigation and others within the agency on your behalf. The need for speed is important. If notified early, the IRS can take action to prevent false returns in your clients' names and will assist you throughout the process.

Contact the Federation of Tax Administrators by Email at StateAlert@taxadmin.org

Learn how to report victim information to the states. Most states require data breaches to be reported to the state attorney general. Many offices may be involved in the notification procedure.

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