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Best practices to deter and deal with identity theft

Fraud [1]The volume and magnitude of identity theft incidents have grown to an alarming extent. Last year, more than 9.9 million Americans were victims of identity theft, a crime that cost them roughly $5 billion. Tax-related identity theft crimes have also risen dramatically. TIGTA reports that 2,416,773 taxpayers were affected by identity theft in 2013, nearly double the number of victims in 2012, nearly quadruple the number in 2011, and nearly ten times the number in 2010. Predictions say the number of victims will again show an increase when 2014 and 2015 tax-year return statistics come in, even though the IRS and practitioners have been reacting more aggressively to stem the tide.

Best Practices to Deter Identity Theft

There are simple and worthwhile precautions that individuals can take to minimize the vulnerability of personally identifiable information. And should identity theft prove inevitable, even despite best practices, following tips such as reviewing monthly bank statements, obtaining a credit report at least once a year, etc., will allow an individual to notice fraudulent activity when it begins, which is key to a swift response that will contain the extent of the fraud and minimize the damage.

Identity Theft Indicators and Responses

People are generally familiar with the multitude of signs of non-tax related identity theft, including unfamiliar credit card charges, unexpected cards arriving, and overdrawn bank accounts. However, individuals may be less familiar with the signs of tax-related identity theft.

According to the Taxpayer Advocate Service (TAS), the most common indicators that an individual is a victim of tax-related identity theft are:

Steps to Take When Identity Theft is Suspected

Once an individual learns that his or her personally identifiable information has been compromised, there are certain steps that one can immediately take in order to prevent, or at least contain, fraudulent misuse.

Responses Specific to Tax-Related Identity Theft

There are additional steps that a victim of tax-related identity theft should take to correct the individual’s tax account and prevent further misuse.