After the massive data breach at Equifax, tax planning is more important than ever for the millions of victims. On October 2, 2017, the company revealed an investigation uncovered an additional 2.5 million victims bringing the total to 145.5 million. Social security numbers, employment history, drivers license numbers, and birthdates are just some of the sensitive information stolen by hackers. Come tax time, criminals can use the data to file fraudulent tax returns and steal refunds.
Right now it is not clear how the breach will impact the 2018 Tax Season but victims need to be vigilant for years to come.
Fraudulent income tax returns are usually filed very early in the calendar year, well before the legitimate income tax return is even a consideration. W-2s can be filed with the Social Security Administration as late as March 31. The SSA has to forward them to the IRS for processing and input, and that can take months! While all of this is occurring, income tax returns are being filed and income tax refunds processed. This delay makes it easy for criminals to steal your return.
So what can you do? Freezing your credit and other monitoring will not prevent tax-related identity theft. The most important action you can take is to file your income tax returns as soon as possible.
This means you need to start gathering your important documents and receipts and monitor your accounts online. You may also want to consider adjusting your withholding. Revisit your W-4 and consider putting more funds in your paycheck and taking less of a refund to even out your tax bill.
The IRS does have online access that can help you monitor your tax records and related information but nothing to help victims of a data breach. Creating a log-in will only allow you to review past and current tax records, as well as monitor your refund.
If you attempt to file your taxes and discover you are a victim of tax-return identity theft you need to call the IRS immediately. The agency will walk you through the next steps which include filling out an identity theft affidavit, receiving an identity-protecting pin number, and contacting the Federal Trade Commission. The IRS will still issue you a refund but you can expect a delay.
When a criminal has an individual’s personal information, that person is ripe for financial crimes extending well beyond income tax refund fraud. And that can be the beginning of a nightmare. You must be vigilant, and we can help.
Your MarksNelson professional can provide you with the steps you should take to protect your identity and minimize any potential for income tax return fraud. Contact Matt Barberich in our Specialty Service Department at 816-743-7700.