Have You Been a Victim of Identity Theft? - Molen & Associates

Stay Ahead of Law Changes & Protect Yourself Against Being Audited: Corporate Transparency Act and Reasonable Compensation

Have You Been a Victim of Identity Theft?

Did you know that credit card fraud was the most common type of identity theft in 2020?  Scammers calling themselves the Social Security Administration, the Internal Revenue Service, collection agents, your boss, and many other powerful entities make countless phone calls, emails, and advertisements fishing for your sensitive information. It should go without saying that providing your bank account information to a stranger claiming they are a Nigerian prince is a bad idea. This brand of email scam is still a highly successful scheme. Identity theft is a booming industry for the thieves and those working against them. It is so important to keep an eye on your credit score. Never offer sensitive info to an unknown caller, and don’t trust strangers’ emails. It’s important to protect yourself from predators by keeping your information private, but even the most careful person can fall victim to identity theft.

How to fix Identity Theft

The 2017 Equifax data breach affected the information of over 147 million American citizens. This is only one example of how available our private information has become. Mid 2018, this breach affected me by allowing fraudulent credit card accounts and an AT&T account to be opened in my name. Once I was made aware of this fraud by receiving bills in the mail, I followed the step laid out by the FTC at https://www.identitytheft.gov/Steps.

I spoke to the fraud departments at AT&T, Best Buy, and Capital One in order to get these accounts investigated and off of my credit report. Next, I contacted Equifax to add a fraud alert that would keep any future fraudulent accounts from being opened. I then reported my identity theft to the FTC and filed a police report with my local police department. Finally, I filed my information to be part of the class action lawsuit against Equifax. This led to a crisp $60 check in the mail for my trouble. My situation was rather harmless and was resolved in a few hours. However, identity theft can be a much more serious issue.

4 Types of Identity Theft

The situation I found myself in after the Equifax data breach is commonly referred to as new account identity theft. All that is required for someone to open bank accounts, credit cards, and utility accounts in your name are:

  • your social security number
  • DOB
  • some other easily attainable information.

The thieves maxed out the accounts and were long gone by the time I realized my information had been abused.

Medical Identity theft occurs when your health insurance information is used by someone to receive medical treatment. This type of theft typically leads to medical bills, fraudulent records on your insurance account, and other insurance related issues. Another type of identity theft involves someone with a poor credit score or a criminal record. They use your Social Security number to get a job in your name. Employment identity theft can keep you from future employment opportunities.  This triggers the IRS to issue income tax forms that you’re expected to pay taxes on. This ties closely to tax identity theft where someone uses your Social Security number to claim a tax refund on your behalf.

How does Tax Identity Theft occur?

When an identity thief gets ahold of your legal name and Social Security number, they can file a tax return in your name and claim a fraudulent refund. The IRS offers the following red flags that may indicate that you are a victim of identity theft:

  • You’ve received an IRS letter inquiring about a suspicious tax return that you didn’t file
  • When trying to e-file your tax return, but one has already been filed in your name
  • You receive a tax transcript that you didn’t request
  • You’ve received an IRS notice about an online account you didn’t create
  • The IRS notifies you that your online account has been accessed or disabled, but you did neither
  • You receive IRS correspondence regarding a tax year you have not yet filed
  • The IRS has records that you received income from an employer you didn’t work for

You’re a victim of Tax Identity Theft, now what?

If you find out about your identity theft through an IRS letter received in the mail, you should call the number on the letter to let the IRS know about the fraud. If you tried to e-file your tax return but it is rejected because one has already been filed in your name, you will need to complete IRS Form 14039, Identity Theft Affidavit –  https://www.irs.gov/pub/irs-pdf/f14039.pdf. Once you have reported the theft to the IRS, you should still file your return on paper, mail it to the IRS, and pay your taxes like normal. If you receive a CP01E Notice, Employment Related Identity Theft, or other correspondence relating to wages that you didn’t earn, don’t blindly report this income on your tax return.

You can resolve this issue by hiring an advisor at Molen & Associates to craft a personalized letter in response. If you receive a tax form such as a W-2 or 1099 from an employer you didn’t work for, don’t include the income. You will need to correct your earning records with the Social Security Administration. Also, make sure to take the recommended steps that the FTC to secure your identity. For more on how to reach someone at the IRS you can check out this blog for more information –  https://molentax.com/how-can-i-talk-to-a-live-agent-at-the-irs/.

Filing taxes after your identity is stolen

Once you have reported your tax identity theft, the IRS will acknowledge your request by sending a letter. They might require proof that you are who you are by answering questions about your information on prior year tax returns. The IRS Identity Theft Victim Assistance department will review your tax account to see how many tax years could have been affected, leave only returns you filed on your account, issue your refund, and place an identity theft indicator on your account.

This indicator informs the IRS that any tax returns filed under your social security number will need extra security to avoid future fraud. You may be issued an Identity Protection Personal Identification Number or “IP PIN”. This six-digit number will come each year in the form of IRS Notice CP01A, and changes for each tax year. This program is not optional, and you will need to obtain it before e-filing any tax returns. Finally, it’s important that you have an advisor at Molen & Associates review your tax transcripts to ensure that your tax returns on file are accurate, and contacting the IRS on your behalf.

Austin Long
Tax Advisor, EA

The Molen & Associates Difference

Mike Forsyth

“Super helpful and timely. This is our first year with them and we look forward to trusting them with our taxes and business books for years to come.”

Caitlin Daulong

“Molen & Associates is amazing! They run an incredibly streamlined process, which makes filing taxes a breeze. So impressed with their attention to detail, organization, and swift execution every year. Cannot recommend them enough!”

Sy Sahrai

“I’ve been with Mr. Molen’s company for few years and I felt treated like family respect and dignity. They are caring, professional and honest, which hard to find these days. Love working with them.”

Unlocking the Benefits of Charitable Contributions: A Guide to Maximizing Your Tax Advantages

Unlocking the Benefits of Charitable Contributions: A Guide to Maximizing Your Tax Advantages In the realm of personal finance and tax planning, charitable contributions emerge as a powerful tool not only for supporting causes close to your heart but also for...

Detailed Guide on Cryptocurrency Taxation and Reporting

Detailed Guide on Cryptocurrency Taxation and Reporting  In the United States, the Internal Revenue Service (IRS) has clear guidelines on the taxation of cryptocurrency, which is considered property for tax purposes. This classification has significant implications...

Gig Economy Taxation: a Detailed Overview

Gig Economy Taxation: a Detailed Overview Reporting Income as a Gig Worker Gig economy workers must report all income earned from their endeavors. This includes, but is not limited to: Earnings from part-time, temporary, or side gigs. Income not reported on...

Standard Deduction vs. Itemizing: A Comprehensive Guide for Small Business Owners and Self-Employed Individuals

Standard Deduction vs. Itemizing: A Comprehensive Guide for Small Business Owners and Self-Employed Individuals   As tax season approaches, one of the most significant decisions you’ll face as a small business owner or self-employed individual is whether to take...

Real Estate and Taxes: A Comprehensive Guide

Real Estate and Taxes: A Comprehensive Guide Real estate taxation is a multifaceted topic that encompasses various forms of taxes, including income tax, property tax, and sometimes even sales tax. Whether you’re dealing with personal or business real estate,...

Steps to Filing a Tax Extension

Is Filing an Extension Bad?   We get this question probably a thousand times a year. An extension is not inherently bad, it is truly personal preference. An extension will not increase your risk for an audit or red flag your return with the IRS. In fact, it is...

How to Pay Your Child From Your Business

How To Pay Your Children From Your Business Paying your children through your business can be a strategic way to manage your business's taxable income, while also providing your children with income and potentially teaching them about the value of work.  While it is a...

Tax Tips for Newlyweds

Tax & Financial Tips for Newlyweds in Houston Marriage is a significant milestone that not only unites two individuals in partnership, but in most cases, also merges their financial and tax situations. For newlyweds in Houston, understanding the tax implications...

Self-Employment Taxes: A Deeper Dive

Self-Employment Taxes: A Deeper Dive Self-employment taxes are a critical component of the tax system in the United States, impacting individuals who work for themselves. Understanding the nuances of these taxes can help self-employed individuals plan and manage their...

Education Tax Benefits: Maximizing Savings with Credits and Deductions

Education Tax Benefits: Maximizing Savings with Credits and Deductions Navigating the complexities of tax season can be daunting, but for those bearing the costs of higher education, there are valuable tax benefits that can ease the financial burden. Among these are...

Request an Appointment Today

14 + 15 =

Call us at

Pin It on Pinterest

Share This