Written by Marc R Barnes EA
December 21, 2012

The IRS estimates that it paid out over $2 billion in fraudulent claims for refunds. While the age of e-filing and automatic deposits has sped up receiving our refunds, it has also created a tremendous identity theft problem. Thankfully, the IRS is now paying attention to this problem and is actively using their data matching programs to help catch identity thieves trying to steal your withholdings.

So why think about the problem now? The key to success for these thieves is early submission of a false tax return to get at your withholdings before you do. By increasing awareness you have a better chance of catching the theft before it takes place.

Here are early warning signs that you may be targeted for this type of identify theft.

  • You receive mail with someone else's name on it from one of your service providers (like a health insurance statement).
  • You receive notice from the IRS that they are holding up your refund (when you have not yet filed your tax return).
  • You are turned down for a loan though your credit should be good.
  • You see strange cars or people wandering by your home or mailbox.

To steal your withholdings, these thieves need your name, Social Security number, birth-date, address and other basic information. Here are some tips to ensure your information is not readily stolen:

  • Health insurance records. Doctors and dentists often use your Social Security number as a patient identifier. Do not use this number when filing out forms at the doctor's or dentist's office.
  • Your health insurance. Another vendor that uses your Social Security number is your health and dental insurance company. Make sure their identification card DOES NOT display your Social Security number. If it does, ask to have a generic number created for your account.
  • Check your statements. Any statements mailed to you should not display entire account numbers. The Social Security Administration has finally masked Social Security numbers on their written correspondence.
  • Fix your bank. The Social Security statements now only show the last four digits of your Social Security number. Unfortunately, most banks use the last four digits of your Social Security number to confirm your identity. That makes it pretty easy to access your confidential credit card and other banking information. To solve this problem ask your bank to use an alternate means to confirm your identity.
  • Go digital. Mailbox theft is a common way thieves get your refund or account information. By signing up for digital statements and automatic deposit, it reduces the risk of theft from your mailbox. Unfortunately, it means you need to consider your digital security as well.
  • Never give it away. Never give your Social Security number or other personal information to someone over the phone or via email. The IRS does not use these means solicit confidential information.

For more information visit the Federal Trade Commission web site: www.ftc.gov/bcp/edu/microsites/idtheft

Marc R Barnes EA

Topic: Marriage and Family