Tax filing season is approaching and that makes now an ideal time to educate yourself about a common type of financial fraud: Tax-related identity theft. Understanding how it works, knowing the warning signs and taking steps to protect your information can help keep your identity safe not just during tax season, but all year long.

How does tax fraud work?

Tax-related fraud and identity theft happens when someone uses your stolen personal information, including your Social Security number, to file a tax return under your name and claim a fraudulent refund. Tax-related identity theft may also involve thieves using children’s identities to claim additional tax credits. In many cases, people don’t know they’re a victim until they file their tax return and it’s rejected by the IRS.

Tax fraud warning signs

The IRS encourages taxpayers to be aware of these red flags and early warning signs that could indicate that they may be a victim of tax fraud and identity theft:

• The IRS rejects your tax return and notifies you that a tax return has already been filed using your Social Security number.
• You receive an unexpected tax refund, part of your refund was withheld or you’re notified that owe an additional tax.
• You receive a payment, a W2 or a 1099 form from an unfamiliar employer.

Steps to take if you think you’ve been scammed

If you suspect that you or a loved one may be a victim of tax-related identity theft, the IRS recommends that you take the following steps.¹

• Contact the IRS as soon as possible — and that includes responding immediately to any official IRS notice. You can also contact the IRS at 800-908-4490.
• Complete an IRS Identity Theft Affidavit^[PDF] if your online return is rejected due to a duplicate filing. Print the affidavit, attach it to your paper tax return and mail it to the IRS.
• Keep paying any taxes that you owe.
• Place fraud alerts on your credit reports.
• Visit the Federal Trade Commission’s identity theft reporting website and tax identity theft resource page.

Tips to protect your personal information from tax identity theft

Criminals tend to file fraudulent returns early in an attempt to beat legitimate taxpayers. That means one of the most important things you can do to help prevent tax-related identity theft is to file your annual tax return as soon as you can.

Other steps you can take to protect your personal information and your identity include:

• Don’t send personal information via email or text, and never give this information over the phone. The IRS will never initiate contact with taxpayers by email, phone or text to request personal information.
• Use security software on your devices and create strong passwords.
• Use multi-factor authentication when available, which adds an extra level of security by requiring you to enter a second piece of information before accessing accounts.
• Avoid accessing your accounts on a public or unsecured Wi-Fi network.
• Learn to recognize and avoid phishing emails, texts and threatening phone calls from imposters.
• Avoid clicking links or downloading attachments from unknown emails or texts, and don’t visit unfamiliar websites that require you to enter personal information.
• Check your credit reports regularly, at least once a year.
• Keep your tax records and family members’ Social Security numbers in a safe place
• Familiarize yourself with IRS taxpayer resources like the Taxpayer Guide to Identity Theft and IRS Identity Theft Victim Assistance: How It Works.

Protect your identity with tools from Commerce Bank

In addition to following the steps above, Commerce Bank customers can access identity theft services to help safeguard their identity. Commerce Bank’s two ID theft prevention tools — Commerce ID Recover and Commerce ID Monitor — support you if identity fraud takes place, help you recover from identity theft, and provide additional security and peace of mind. Both services^[PDF] connect you with resolution specialists who can contact creditors and act on your behalf throughout the restoration process.
Being aware of tax fraud and identity theft — and preparing ahead by following the tips above — are key to keeping your personal and financial information protected. For more information and tips to keep your finances and online accounts secure, contact us.