As everyone with and without sizable assets knows, identity theft is becoming a fear we all run the risk of having to deal with at some point in time. There are hackers everywhere. Here in the USA, we rank second in the world of hackers, preceded by China and followed by Turkey and Russia. And they get to you in many different ways. They hack into ATM machines, through business and personal computers, they hack into large retailers’ databases such as the recent hacks into DSW Shoes, Polo by Ralph Lauren, and BJ’s Wholesale. Hackers are attacking hospital data accounts for patient’s “secure” information. They even attacked the Internal Revenue Service website recently and gained access to hundreds of thousands taxpayers accounts.
What can you do to try not to become a victim of identity theft? Banks, brokers and other financial institutions provide guidance and pamphlets to their customers on ways to protect you. The Internal Revenue Service provides a convenient publication to help taxpayers. Publication 4535 is a simple one page notice that can be very useful to individuals to prevent and then act if your identity is stolen.
Preventative measures noted by Publication 4535 include:
Not mentioned but a wise idea is to sign on to an identity protection company such as LifeLock, Identity Guard or IdentityForce.
There is preventative action that you can take if you have become a victim of identity theft and you are concerned that your stolen information may be used to damage your federal tax records as well. You can alert the IRS about your situation with Form 14039 Identity Theft Affidavit. Form 14039 alerts the IRS that your identity has been compromised and marks your social security number for filing alerts. It will take the IRS approximately 120 days to send you a response of receipt upon you filing Form 14039.
You will then receive a second notice from the IRS that will tell you whether you are eligible for an Identity Protection PIN. An IP PIN is a 6-digit number assigned to eligible taxpayers to help prevent the misuse of your social security number on fraudulent federal income tax returns. You have to go to the IRS website upon receipt of this notice to apply for the IP PIN. Once you receive an IP PIN, you must use it to confirm your identity on your current tax return and any delinquent returns filed during the calendar year. The IRS will mail you a new IP PIN each December by US postal mail. The IRS uses the IP PIN to identify you when you file your returns electronically. It also prevents hackers from filing tax returns under your social security number in the attempt to steal refunds under your identity.
The best protection is to always be smart and careful about your identity, follow the guidance provided on Publication 4535 and offered by your financial advisors, and close monitoring of your personal records. And if the worst happens, know the steps to take to prevent further damage.
Wayne L. Martin, CPA, Partner