Small Business Taxes & Management

Special Report


Basic Steps to Protect Yourself From Identity Theft

 

Small Business Taxes & ManagementTM--Copyright 2016, A/N Group, Inc.

 

What's the first step you should take if you think you're a victim of identity theft? If you believe you are a victim of identity theft, you should contact one of the three major credit bureaus to place a “fraud alert” on your credit account. This critically important step makes it harder for identity thieves to obtain a credit card or loan in your name.

Contacting a credit bureau if you think you are an identity theft victim can help you in many ways, including helping protect your tax information.

The three main credit bureaus:

If you are an identity theft victim, you need contact only one of the three to request a fraud alert. One bureau must notify the others when a fraud alert is requested. You’ll get a letter from each credit bureau. It will confirm that they placed a fraud alert on your file.

A fraud alert is free, and it lasts for 90 days. You can renew it. It provides a red flag to other businesses where the thieves may be trying to open accounts and legitimate businesses may take additional steps to verify identities.

Three types of fraud alerts are available:

Also, you should get your free credit report right away to ensure identity thieves have not opened additional accounts. Go to www.annualcreditreport.com, which is operated by the three major bureaus, or call 877-322-8228.

If you want even stronger protections or if you were part of a large-scale data breach, you might consider a “credit freeze” which applies even stronger protections but often times for a fee that varies by state.

A credit freeze, also known as a security freeze, lets you restrict access to your credit report, which in turn makes it difficult for identity thieves to open new accounts in your name. You must contact each of the three credit bureaus to establish a credit freeze.

What’s the difference between a credit freeze and a fraud alert? A credit freeze locks down your credit. A fraud alert allows creditors to get a copy of your credit report as long as they take steps to verify your identity.

After receiving your freeze request, each credit reporting company will send you a confirmation letter containing a unique PIN (personal identification number) or password. Keep the PIN or password in a safe place. You will need it if you choose to lift the freeze.

If you apply for credit, a home mortgage or a job, you will have to temporarily lift the freeze so that the businesses may confirm your credit record. There is a fee for lifting a freeze as well.

There are also specific steps you can take with respect to your taxes. You may be the victim of identity theft as a result of a breach of financial information as might occur when a store, bank, etc. information is breached or from tax-related identity theft. In the latter case someone else files a tax return using your social security number and a false W-2, etc. to claim a tax refund. False returns are usually filed very early in the year, before most taxpayers get all their information to file.

In this situation you may be unaware you are a victim until you try to file your taxes and learn one already has been filed using your SSN. The warning signs of possible identity theft are the receipt of a IRS notice or letter that states that:

Steps to take if you become a victim

If your SSN is compromised and you know or suspect you are a victim of tax-related identity theft, take these additional steps:

If you previously contacted the IRS and did not have a resolution, contact the Identity Protection Specialized Unit at 1-800-908-4490. We have teams available to assist.

To reduce your risk:

To learn additional steps you can take to protect your personal and financial data, visit Taxes. Security. Together. You also can read IRS Publication 4524, Security Awareness for Taxpayers.

 


Copyright 2016 by A/N Group, Inc. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The information is not necessarily a complete summary of all materials on the subject. Copyright is not claimed on material from U.S. Government sources.--ISSN 1089-1536


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--Last Update 01/08/16