The top three tax scams in the IRS "Dirty Dozen Tax Scams for 2014" are Identity Theft, Telephone Scams, and Phishing. Each of these relate to stealing a taxpayer's identity information, personal information, and financial account information through various means including dumpster diving and pretending to be an IRS employee through threatening emails or telephone calls.
Prevention: IRS employees do not call and threaten to take your license, put you in jail, or deport you for not making a tax payment. They also do not send emails requesting payment information via your financial account or credit card. If you do receive one of these calls, make sure you get the contact information including name, phone number and badge number of the caller. Then contact the IRS at 800-829-1040. The IRS employees at the main IRS Help Line can help you determine if the call or email you receive is legitimate, and they can help you with any payment issues you may have with the IRS. If you know you do not owe any taxes, and you get a call or email saying that you do, once you and your tax professional determine the request is fake, consider contacting the Treasury Inspector General for Tax Administration (TIGTA) at 800-366-4484. I can't stress enough, do NOT provide your personal information to an email request or phone request from the IRS especially if you did not initiate the contact. The IRS will not contact you by email and rarely by phone to request your personal information. If there is an issue, or a payment due, you will receive a paper letter in the mail.
Take action: If you suspect your personal information has been stolen or compromised, call the IRS Identity Protection Specialized Unit at 1-800-908-4490 or complete IRS Form 14039, Identity Theft Affidavit, and report the theft to the IRS. You will be required to provide information concerning when and how you realized you were a victim of identity theft or describe an event involving your personal information, such as a data breach, that my affect your federal tax records in the future. You will be asked to provide a copy of either: your passport, driver's license, Social Security Card, or other valid U.S. federal or state government issued Identification, in order to prove your are the real you and establish your identity for next steps. The IRS recommends you file a police report to further protect yourself. They will share information about the ID Theft with the appropriate law enforcement agencies.
The IRS has an identity theft assistance system that helps people who have been victimized. In particular they have a program that issues an additional secure identification number, the Individual Protection Personal Identification Number (IPPIN), to secure your tax records and ensure the processing of your tax return is not held up during the processing cycle while a tax return with a duplicate Social Security number is investigated. The IPPIN is a six-digit number issued annually by the IRS to all taxpayer's who have had their identity compromised and have completed Form 14039 reporting the compromise. The number is an additional layer of security and must be included on your tax return when you file. To get your IPPIN go online to www.irs.gov/getanippin or contact the IRS Help Line. You will be asked to answer some personal questions to verify your identity. If you use the IRS Help Line, your IPPIN request will be delayed. Once your ID Theft case is processed by the IRS, you will have an internal IRS identification flag on your file and you must have a new and unique IPPIN issued to you each year.
This system keeps other individuals from being able to file a tax return with your name and Social Security number as only you have the IPPIN information. Computer software vendors allow the entry of the IPPIN in their software, however if you are mailing a paper tax return, make sure you enter the IPPIN in the appropriate box next to your signature on any of the Form 1040 series tax forms. The IPPIN may be used to file only one tax return per year and you must get a new IPPIN each year.
Beginning this year, spouses of taxpayers who use an IPPIN must have their own IPPIN. Also new for this year, the IRS is testing a pilot program for taxpayers from Florida, Georgia, and the District of Columbia who have NOT been a victim of ID Theft or a victim of a data breach potentially leading to ID Theft. At the taxpayers option they may apply for acceptance into the IPPIN program by using the online IPPIN application process before filing their return this year. In other words, the IRS is testing out optional participation in the IPPIN program for taxpayers. If you chose to join the IPPIN Program, you must get a new IPPIN each year. This program is a safe and secure way to further protect your tax return and personal and financial information associated with a tax return. There will be more information to come on this trial program after the IRS has a chance to review how it went this year.
At the end of the day there is certainly more risk today for identity theft and personal information misuse and abuse. However there is also increased help out there, but to start you need to invest the time and focus to protect yourself. Do not provide your personal and/or bank account information, or make a payment when contacted by phone or email without first verifying the request independently. Be mindful of where you use your credit/debit cards, and keep track of everything in your wallet, so you can report it right away if lost or stolen. And remember, protecting your tax information is just as important as protecting your wallet and perhaps even more so.