Tax Identity Theft: A Growing Threat in Massachusetts and Beyond
Most people associate identity theft with compromised credit cards or bank accounts. However, a more insidious form is gaining traction: tax identity theft. In Massachusetts, and across the nation, criminals are increasingly using stolen Social Security numbers to file fraudulent tax returns and claim refunds. The Massachusetts Department of Revenue (DOR) is warning taxpayers to be vigilant.
How Tax Identity Theft Works
Tax identity theft occurs when someone uses your Social Security number to obtain employment or, more commonly, to file a fraudulent tax return in your name. Victims often discover the fraud when they attempt to file their own taxes and are met with rejection due to a previously filed return. The DOR may also notify you directly if suspicious activity is detected.
Beyond Massachusetts: A National Problem
While the recent warnings originate from Massachusetts, this is a nationwide issue. A recent case highlighted in the Fall River Reporter involved a restaurant owner accused of a fraud scheme utilizing over 100 stolen identities to fraudulently obtain over $1 million in SNAP and PUA benefits across multiple states, including Massachusetts, Latest York, Pennsylvania, Ohio, Washington, Nevada, and Rhode Island.
Protecting Your Social Security Number
The DOR has the legal right to request your Social Security number on Massachusetts tax returns for identification, processing, and refund purposes. However, protecting this number is paramount. Keep your Social Security card, birth certificates, and other sensitive documents in a secure location at home. Review credit card and bank statements monthly for any unusual activity.
Scams to Watch Out For
Criminals often pose as tax authorities via text, email, or phone calls, attempting to intimidate you into paying fictitious taxes or providing personal information. The DOR explicitly states they do not initiate contact via these methods regarding refunds or taxes owed. If you receive a suspicious communication, do not respond or click any links. Hang up on suspicious phone calls.
Choosing a Tax Preparer Wisely
Selecting a trustworthy tax preparer is crucial. The IRS advises against preparers who promise larger refunds than others, guarantee results, or charge fees based on a percentage of your refund. Ensure your preparer uses secure methods for transmitting documents online, such as encrypted portals.
For Sole Proprietorships: Consider an EIN
If you operate a sole proprietorship, the IRS recommends using an Employer Identification Number (EIN) instead of your Social Security number to protect your personal information. You can apply for an EIN through the IRS website.
IRS Resources and Identity Protection PINs
The IRS offers extensive guidance on protecting yourself from tax fraud. You can proactively request an Identity Protection PIN (IP PIN) from the IRS to support prevent someone from filing a fraudulent return in your name.
What to Do If You’re a Victim
If you suspect you’ve been a victim of tax identity theft, immediately:
- Report the fraud to the IRS: https://www.irs.gov/help/report-fraud
- Report to the Federal Trade Commission (FTC) at IdentityTheft.gov
- Change passwords for all online financial accounts.
- File a local police report.
- Contact credit bureaus (Equifax, Experian, and TransUnion) to place a credit freeze and fraud alert.
- Contact the DOR at (617) 887-6350.
Fraud Reporting to the Massachusetts DOR
If you suspect tax fraud committed by an individual or business, complete CIB Form 001E and email it to [email protected] or mail it to the Massachusetts Department of Revenue Criminal Investigations Bureau.
FAQ
- What should I do if I receive a text message from someone claiming to be the DOR? Do not respond or click any links.
- Can the DOR question for my Social Security number? Yes, under Massachusetts law, they can for tax return processing.
- Where can I report tax fraud? To the IRS, the FTC, and the Massachusetts DOR.
- What is an IP PIN? An Identity Protection PIN issued by the IRS to help prevent fraudulent tax returns.
Protecting your tax identity requires vigilance and proactive measures. By staying informed and following the guidance of the DOR and the IRS, you can significantly reduce your risk of becoming a victim of this growing crime.
