Identity Theft and Taxes

By: Jan Paul C. Ferrer

 

Approximately 15 million Americans are victims of identity theft each year, resulting in financial losses of over $50 billion.1 One particularly insidious form concerns taxes, whereby a legitimate taxpayer’s identity is used to fraudulently file a tax return and claim a refund. In fact, the IRS paid $3.6 billion in fraudulent tax refunds in 2013.2

Tax identity thieves use a stolen Social Security number to file a forged tax return early in the filing season. When you then file your return later, it is kicked out as a second filing and you are sent a letter from the IRS informing you of the double filing.

If you receive this letter or you believe you are a victim of tax ID theft, notify the IRS immediately by completing and submitting IRS Identity Theft Affidavit, Form 14039. Even after submitting this form, you can expect a long wait for your tax refund–up to six months according to the IRS. State returns may take even longer, as not all states are up to speed in dealing with the problem.

What Steps Can You Take to Minimize Your Chances of Becoming a Victim?

• Don’t give out your Social Security number. Provide it only when required.

• Check your credit reports every year. You have the right to obtain a free copy of your credit report every 12 months from each of the three credit reporting bureaus– Equifax, Experian and TransUnion.

• Monitor your email. Be on the lookout for phishing scams, particularly those that appear to come from a credit card company, bank, retailer or anyone else you do business with.

• Be careful online. When banking or shopping online, be sure to use Web sites that protect your financial information with encryption, particularly if you are using a public wireless network via a smartphone. Sites that are encrypted start with “https.” The “s” stands for secure.

• Protect your personal computers. Use firewalls, antispam/ anti-virus software, and change passwords for Internet accounts.

Being a victim of a fraudulent tax filing is no fun. Take these steps to help prevent it happening to you.

Sources/Disclaimers

1Identitytheft.info, http://www.identitytheft.info/vic tims.aspx.

2CNN Mony, “IRS paid $3.6 billion in fraudulent tax refunds in 2013,” November 7, 2013.

IRS, “Taxpayer Guide to Identity Theft,” http://www.irs.gov/uac/Taxpaye r-Guide-to-Identity-Theft.

If you’d like to learn more, please contact Jan Paul Ferrer.

Article by Wealth Management Systems, Inc. and provided courtesy of Morgan Stanley Financial Advisor.

The author(s) are not employees of Morgan Stanley Smith Barney LLC (“Morgan Stanley”). The opinions expressed by the authors are solely their own and do not necessarily reflect those of Morgan Stanley. The information and data in the article or publication has been obtained from sources outside of Morgan Stanley and Morgan Stanley makes no representations or guarantees as to the accuracy or completeness of information or data from sources outside of Morgan Stanley. Neither the information provided nor any opinion expressed constitutes a solicitation by Morgan Stanley with respect to the purchase or sale of any security, investment, strategy or product that may be mentioned.

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[Jan Paul Ferrer may only transact business in states where he is registered or excluded or exempted from registration [http://www.morganstanleyfa.co m/ferrer. Transacting business, follow-up and individualized responses involving either effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made to persons in states where Jan Paul Ferrer is not registered or excluded or exempt from registration.

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