Identity theft continues to be one of the fastest-growing crimes in the United States. Recent reports from the Bureau of Justice Statistics alarmingly indicate that approximately 10% of Americans over the age of 16 fell victim to identity theft just last year. In the face of this rising threat, understanding identity theft and how to protect yourself becomes increasingly crucial.
Unraveling Identity Theft: More Than Just Financial Fraud
Identity theft is a fraudulent act in which a criminal maliciously uses another person’s identifying information to perform transactions and actions under their name. While identity theft is commonly associated with fraudulent financial activities like unauthorized bank withdrawals or credit card applications, it can extend beyond your financial affairs and even impact your tax obligations.
Imagine, for instance, that an identity thief gains access to your Social Security number and uses it for employment purposes. The perpetrator’s wages are then reported to the IRS under your name, making it appear that you’ve failed to report all of your income when you file your tax return.
Similarly, an identity thief could file a fraudulent tax return using your details to obtain a refund illegally. In such cases, when you submit your genuine tax return, the IRS could mistakenly consider it as a duplicate since a refund has already been issued under your name.
Building Your Defense Against Identity Theft
While the consequences of identity theft can be severe, a proactive approach to safeguarding your personal information can go a long way in protecting yourself.
- Practice Discretion: Be vigilant about your surroundings when sharing personal information. Never reveal sensitive details over the phone unless you’ve initiated the call.
- Secure Document Disposal: Any documents, receipts, or mail that contain useful information for an identity thief – such as your bank account details, Social Security number, address, and birth date – should be destroyed appropriately.
- Safe Password Practices: Your Social Security number should never be used as a password or PIN or displayed on your driver’s license unless absolutely necessary.
- Digital Protection: Secure your computer with firewall programs, antivirus software, and secure browsers before disclosing personal information online.
Navigating the Aftermath of Identity Theft
If you suspect that your personal information has been used for tax fraud, it is imperative to promptly contact the IRS as instructed in the notice you receive. Signs that your identity may have been compromised include wage statements from unknown employers or indications that more than one tax return has been filed under your name.
The IRS tax examiners can work with you and other agencies, like the Social Security Administration, to rectify these discrepancies. However, it’s vital to remember that the IRS will never initiate a request for taxpayer information via email. Any such communication is likely an attempt by identity thieves to obtain your tax information.
The IRS further advises taxpayers to exercise caution when choosing a tax preparer. Given their access to your financial records, it’s essential to vet their credentials and experience thoroughly. Steer clear of preparers who guarantee results, base their fees on the refund amount, or claim they can obtain larger refunds than others.
Identity theft is a serious issue that can wreak financial and emotional havoc. For more resources on identity theft and guidelines on responding if you become a victim, the Federal Trade Commission’s website provides a wealth of information.
Continue the Conversation
At Legacy Private Trust Company, we understand the importance of informing and empowering our clients, especially on critical issues such as identity theft. We invite you to continue the conversation on our newly launched cybersecurity blog page, where we delve deeper into identity theft, online security, and more.
Your financial security is our top priority. Together, we can build more robust defenses against identity theft.
If you are a Legacy client and have questions, please do not hesitate to contact your Legacy advisor. If you are not a Legacy client and are interested in learning more about our approach to personalized wealth management, please contact us at 920.967.5020 or connect@lptrust.com.
This newsletter is provided for informational purposes only.
It is not intended as legal, accounting, or financial planning advice.
