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Protect yourself against tax fraud and identity theft

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Protect yourself against tax fraud and identity theft

Tax identity theft

When it comes to taxes and tax fraud, identity thieves may use your Social Security number to:

  • Get employment or
  • File a fraudulent income tax return to get a refund.

Tax identity theft occurs when a taxpayer’s Social Security number is:

  • Used by another individual to get a job
  • Wages are reported under the stolen Social Security number and
  • The taxpayer receives a bill from the Massachusetts Department of Revenue (DOR).

The affected taxpayer often never lived or worked in Massachusetts. Thieves may also try to use your Social Security number to file a fraudulent income tax return with the DOR to get a refund.

Steps to take if you’re a victim of tax identity theft

If you think you’re a victim of identity theft, the “How to report tax fraud or identity theft” page will tell you:

  • What documents you’ll need to submit to DOR
  • How to report a case of identity theft.

DOR’s response to reported cases of tax identity theft

Once DOR has received your documents:

  • Your case will be assigned to an identity theft examiner
  • The examiner will contact you at the telephone number you’ve provided within 5 days of receiving your information.

The examiner may ask for additional information, such as:

  • If you ever lived or worked in Massachusetts
  • Where you worked.

While your case is being viewed, the examiner will make sure that you don’t receive any additional bills or enforcement activity.

If your bank account has been levied, you must:

  • Contact DOR’s Identity Theft Unit at (617) 887-6350
    • Leave an unblocked number: our telephones don’t allow unblocking.
  • Have your account number available when you contact us.

In most identity theft cases:

  • You won’t be required to file an amended return.
  • DOR will be able to resolve your Identity Theft case within 45 calendar days from the date we first received your required information.
  • DOR will discuss the next steps with you if the case isn’t resolved within 45 days.

Your Social Security number

Under Massachusetts law, the DOR has the right to ask an individual to provide his or her Social Security number on a Massachusetts tax return.

DOR uses these numbers for:

  • Taxpayer identification
  • Forms processing.
  • Tax refund processing.

Although tax return information is generally confidential, DOR may legally disclose return information to:

  • Other taxing authorities
  • Those authorized by law.

Identity theft and your tax account

Most people think of identity theft as stolen bank account or credit card information. However, identity thieves can also use your personal information to:

  • File a tax return in order to get a refund or
  • Get a job.

For instance, if someone stole your Social Security number to get a job:

  • The employer would report any income earned to the IRS and DOR under that Social Security number
  • This would make it appear that you didn’t report all of your income on your tax return.

An identity thief might also use your Social Security number to file a tax return in order to receive a refund. If the thief files the tax return before you do, it will appear to DOR that you already filed and received your refund.

If you receive a notice from DOR that leads you to believe someone may have used your Social Security number fraudulently:

  • Read “How to report tax fraud or identity theft” and
  • Contact DOR immediately.

You should be alerted to possible identity theft if the DOR notice states that:

  • More than one tax return for you was filed, or
  • DOR records indicate you received wages from an employer that you’ve never worked for.

When choosing someone to prepare your income tax returns:

  • Remember that tax preparers have access to your personal records
  • Work only with either a professional or someone reputable.

If you’re the sole proprietor of a business, you may want to:

  • Keep your Social Security number private, for business purposes
  • Use an Employer Identification number instead of your Social Security number.

To apply for an Employer Identification number, visit the IRS website.

Protecting your personal information

Identity thieves have many ways of stealing your personal information. To minimize your risk, you should:

  • Order a free copy of your credit report and
    • Check it closely for accuracy and
    • Monitor it every year
  • Keep important personal information in a secure place in your home, including:
    • Social Security card and birth certificates.
    • Anything else you may carry in a purse or wallet that has sensitive information.
  • Review all credit card and bank statements carefully each month to discover any unusual activity or unauthorized charges.
  • Unless you know for certain whom you’re dealing with, don’t give out personal information:
    • Over the phone,
    • Through the mail or
    • Online.
  • Change your driver’s license number from your Social Security number to a randomly assigned number.

IRS guidelines

IRS provides guidance on how you can protect yourself from tax fraud.

According to IRS, taxpayers should always avoid paid preparers who:

  • Claim they can obtain larger refunds than other preparers
  • Guarantee results or
  • Base fees on percentage of refund amount.

Instead of a Social Security number, IRS recommends sole proprietors use an Employer Identification (EIN) for business purposes.

To apply for an EIN, visit the IRS website.

Additional information

Since preparers have access to your personal information, be sure you hire a reputable tax preparer. Although DOR cannot recommend a preparer, the following may provide guidance when you’re choosing a tax preparer:

  • Massachusetts Chapter of the National Association of Tax Practitioners
  • Massachusetts Society of Certified Public Accountants
  • Massachusetts Society of Enrolled Agents.

Massachusetts residents can get a free copy of their credit report from the 3 consumer reporting companies:

  • Equifax
  • Experian
  • TransUnion.

 

 

 

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