Market Fads & Fashions

If your identity is stolen, your finances can quickly become a
nightmare. A less obvious problem is the effect identity theft
can have on your taxes.

Identity Theft

Generally, thieves steal your personal data for the purpose of
running up credit card charges or opening and abusing new
accounts. A developing trend in the identity theft field
concerns schemes impacting your taxes.

Selling Social Security Numbers

Identity thieves have created a new line of business – selling
your social security number. Who would want to buy it? The list
is surprising long, but undocumented workers, individuals with
bad credit and people trying to obtain a new identity lead the
list. This can create a huge problem for you since any income
paid to those individuals is reported to the IRS as being paid
to you. This results in the IRS having inflated income numbers
and, often, audits when you “under report” your income.

With the creation of the Real ID Act, better known as the
National ID Card, things will only get worse. Under the Act, all
workers will be required to submit social security numbers to
obtain jobs. With our leaky borders, there will be a high demand
for your social security number.

False Tax Filings

It doesn’t take much to file a tax return. What’s to stop an
identity thief from filing one under your name to generate a
refund? Nothing. To generate the maximum refund, you can be all
kinds of frivolous deductions will be claimed. After all, it
will be you that has to attend the audit.

What Can I Do?

If you receive a notice from the IRS that leads you to believe
someone may have used your Social Security Number fraudulently,
you should notify the IRS immediately. Indicators can be found
in notices from the IRS that state:

1. More than one tax return for you was filed, or

2. IRS records indicate you received wages from an employer
unknown to you.

Don’t hesitate or be nervous about contacting the IRS. The
agency knows this is a growing problem and not an “opportunity”
to pound on taxpayers.