Lifestyles, technology and new innovations have opened doors. They have also unlocked access to information, thereby increasing identity theft affecting individual tax filings.  Today, identity theft accounts for one-third of all consumer crimes.  The internet is used to intrude on systems containing restricted information.  The IRS claims it has paid more than six billion dollars in fraudulent tax refunds. This year the State Franchise Board expects to join the ranks.

Like the government, private citizens can take steps in protecting their identities.  One example is using stronger sign-ins for user and password accounts. Today, the government uses a multistep verification process to secure any changes to data. The programmed systems generate warnings of many tax filings and refunds.

The latest approach to identity theft affecting tax filings involves each of the states. Because states don’t share informational systems, tax identity theft is potentially greater.  Stolen social security numbers are used to file duplicate tax returns in different states. Don’t be fooled into thinking this can’t happen by living in a tax-free state. Personal information can be used in any state.

Once criminals have personal data, tax identity theft is fairly easy. A tax return using another person’s social security number can be filed to collect the refund.  When many filings occur or a victimized taxpayer seeks status, it triggers an alert. Unfortunately, the true taxpayer must deal with the mess. In some cases, a rightful refund could take up to six months or longer.

Preventing Identity Theft

Awareness is the best protection against tax identity theft.  Understand how cyber criminals use computers, smart phones, tablets and mobile apps.  It also involves personal information shared online or during a conversation. The good news is there are steps to protect misuse of confidential information.


Neither the state nor federal government place telephone calls or send emails with threats. Although the government has deadlines for filing, there is always an opportunity to respond.  When receiving a telephone call or notice, ask for the caller’s information.  Get a name and the employee or badge number for the record.  During the conversation, limit the disclosure of personal information.  Let them know that an advisor or legal representative will be contacting them.  If they hesitate for any reason, something is wrong. Always contact the agency they represent to verify the contact.

A notice goes out to the taxpayer when a duplicate tax return is recorded. Call the agency for all information on the complaint. Everyone has the right to get the documents connected to their personal information. Confirm the social security number and address on the tax return for the record. Be sure to collect the details, including the submission date of the return.  For unreported earnings, get the employer’s information and a copy of the tax documents.  Documents should include earning statements for W-2s and 1099s.


The one source of all reported earnings is the Social Security Administration. It’s a good habit to check contributions at the end of each year to make sure the information is accurate. If there’s an error, contact the Social Security Administration immediately. Using someone else’s social security number to collect earnings is tax identity theft.  Assigned specialists work with each person on tax identity theft.  The IRS does its best to protect and guard tax accounts from future incidents.

Theft vs. Fraud

There are differences between theft and fraud and how the criminals use the information.  Identity theft is when a person assumes the name or social security number of a private party. Identity fraud happens when stolen credit card information is used illegally.  This information can also be used to obtain loans, making the victim responsible for the debt.  As a victim of tax identity theft, report the incident to both federal and state agencies.


Emotions run high when tax identity theft happens. Try to remain patient and allow the process to work through each step of discovery.  Suspicion of tax identity theft should be reported to the IRS and the State Franchise Board.  During the recovery processes, continue working with a tax preparer.  A tax preparer can work with the agencies by providing the necessary documents.  It may help to stop legal actions during the investigation.

Conclusion – There is life after identity theft

The most significant factor associated with tax identity theft is use of personal information. For example, social security numbers are necessary for accessing governmental services and receiving benefits. In most cases, the victim isn’t even aware of the situation until receiving a notice from the agency.  The challenge is to establish proactive systems to protect private information.  The next step is educating the public about secured communication methods to control it.