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Taxpayer Identity Theft in 2018

Equifax’s major data loss in 2017, where thieves stole sensitive information of more than 145 million people, is making taxpayers, the IRS, and CPAs worry. Tax authorities fear that Equifax’s stolen information may create havoc in 2018 as crooks race to use the stolen data to falsify returns.

Fraudulent tax returns are typically filed early in the year since criminals can scam the IRS is if they file the return before the taxpayer does. By the time the CPA starts work, the damage is usually already done. It’s also difficult for CPA firms to help clients who have been victims of identity theft. The IRS is usually unwilling to deal with anyone other than the taxpayer in the case of identity theft.

A taxpayer can find out if another return has been filed in their name by contacting the IRS or Illinois Department of Revenue by phone. Victimized taxpayers will receive a letter from the IRS or state tax authority with instructions as to what to do and where to send a response or additional documentation.√ā¬†Electronic filing speeds help since a taxpayer cannot submit a return electronically if one has already been filed.

Children are especially vulnerable so taxpayers should closely monitor their children’s credit reports and can even request a transcript of their children’s accounts from the IRS to see which returns, if any, have been filed.

Signs of identity theft include incorrect tax return amounts, owing money that you weren’t expecting; and records of new accounts being opened in your name.The IRS will never start a proceeding with a taxpayer via email or telephone, always by mail. Even with all the extra attention and interest on potential tax fraud this year, this will not change.

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