Protect Yourself in 2025 from Tax-Related Identity Theft

A Growing Concern for Taxpayers

By Carla Gwinn, EA

As tax season approaches, taxpayers and tax professionals alike are being urged to remain vigilant against the rising threat of tax-related identity theft. This form of fraud occurs when criminals use stolen personal information, such as Social Security Numbers (SSNs), to file fraudulent tax returns and claim refunds. The Internal Revenue Service (IRS), in collaboration with state tax agencies and private industry partners, has implemented robust measures to combat this issue, but the threat persists.

The Scope of the Problem

Tax-related identity theft has been a significant challenge for the IRS and taxpayers for years. Criminals often exploit stolen data to file false tax returns early in the filing season, claiming refunds before the legitimate taxpayer has a chance to file. According to the IRS, this type of fraud not only disrupts the tax system but also places a heavy burden on victims, who may face delays in receiving their legitimate refunds.

One of the most effective tools introduced by the IRS is the Identity Protection PIN (IP PIN). This six-digit number, known only to the taxpayer and the IRS, adds an extra layer of security to tax returns. Taxpayers can opt into the IP PIN program to protect their accounts from unauthorized access.

Tips for Taxpayers

Taxpayers can take several proactive measures to reduce their risk of identity theft:

Secure Personal Information: Treat personal data, such as SSNs and financial records, like cash. Avoid sharing sensitive information over email or phone unless you are certain of the recipient’s identity.

Use Strong Passwords: Create unique, complex passwords for online accounts and consider using a password manager.

Enable Multi-Factor Authentication: Many online tax software providers oƯer multi-factor

authentication, which requires a second form of verification, such as a code sent to your phone.

Monitor Your Tax Account: Regularly check your IRS account for any unauthorized activity. If you suspect identity theft, report it immediately to the IRS.

What to Do If You’re a Victim

If you suspect you are a victim of tax-related identity theft, the IRS recommends taking the following steps:

1. File Form 14039, Identity Theft Affidavit: This form notifies the IRS of the suspected fraud.

2. Contact the IRS Identity Theft Hotline: Victims can call 1-800-908-4490 for assistance.

3. Monitor Your Credit: Place a fraud alert on your credit report and consider freezing your credit to prevent further misuse of your information. For more information on protecting yourself from tax-related identity theft, visit the IRS Identity Theft Central at IRS.gov/IdentityTheft.

Urban Trendsetters Money & Wealth contributor Carla Gwinn is an entrepreneur and owner of a Liberty Tax Franchise located in Columbus, Ohio. In addition, Carla is the president of the Greater Linden Business Association. For more information visit /www.libertytax.com/11711