Identity Theft – A Victimless Crime?

Author:  Susan Thiessen

Susan Thiessen

National Tax Administrator


910 E. St. Louis Street, Suite 400
P.O. Box 1900
Springfield, MO 65801-1900 (65806)

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“Street crime is down because everybody is now filing false tax returns,” a police chief tells the IRS commissioner. There can be a lot of money in identity theft with very little physical risk—and in many cases, only a computer is needed to steal someone’s identity.

Thieves often begin their fraud by stealing an individual’s Social Security number (SSN) and other personal information. The thief can use this information to file a false tax return claiming a fraudulent refund or gain employment using stolen personal information while under-withholding taxes against those wages.

Victims of identity theft may not realize their situation until they file their tax return and uncover a series of problems. The first step in cleaning up the mess is the burden of proof. Victims must work diligently to prove they are who they say they are, alerting financial institutions, credit reporting agencies, local law enforcement and the IRS of identity theft.

On top of the extra work, victims often deal with a delay in receiving their tax refund. They might have to wait several months as the IRS authenticates the duplicate refund. In some cases, bank loans can be held up, since banks face difficulty validating and verifying tax return information when a victim’s tax records are blocked.

Identity theft can be perpetrated using low-tech methods such as purse snatching or dumpster diving or high-tech techniques like email “phishing” or spyware. Phone scams are another common technique. Phone scammers often imitate the IRS and pretend they know something about you in an attempt to convince you to share more personal information. As the IRS itself states, the agency will never do any of the following:

  1. Call to demand immediate payment
  2. Demand you pay taxes without giving an opportunity to question or appeal the amount
  3. Require you to use a specific payment method for your taxes
  4. Ask for credit or debit card numbers over the phone
  5. Threaten to involve local law enforcement

The IRS also says it doesn’t use unsolicited email, text messages or social media to discuss your personal tax issues.

Identity theft numbers continue to rise. Know how to reduce your threat and know what to do if you fall victim to identity theft. Your BKD advisor can help you plot a course if you have been victimized. This recent BKD article has additional information on identity theft.

Here are some best practices to reduce the potential for identity theft:

  • Protect your records – Do not carry your Social Security card or other documents with your SSN; only provide your SSN if necessary and if you know the identity of the person requesting the information.
  • Practice smart record retention – Shred documents you do not need; don’t hang on to documentation with personal information for decades unless absolutely necessary.
  • Secure sensitive information – Be cautious in sharing personal information, especially via phone or electronic communications. Know your audience; use secure electronic methods to transmit sensitive data and don’t click on suspicious links in emails from unknown parties.
  • Take charge of your credit – Monitor your credit routinely or use a credit monitoring service.
  • Say something – If you suspect identity theft, report it!

Download the 2015 Year-End Tax Advisor here!

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