Peaceful Divorce

Whether divorcing or not, one of the things that people need to be aware of is the increasing problem of tax identity fraud.

I know this from personal experience. A few years ago, after sending in a check to the Internal Revenue Service, I received notice that I had already filed. I only found out when my mortgage company called to notify me that the IRS was showing two different 1040s filed under my Social Security number. They attempted to send the check back to an address that wasn’t mine, but luckily the address was phony and didn’t belong to anyone else, either.

What happened to me is part of an alarming trend of tax identity fraud that is sweeping the country, including the arrest of over 50 individuals in the Atlanta area alone. 

  • A recent scam uncovered this past Friday involved individuals impersonating IRS and FBI personnel, and making threatening calls to taxpayers. The perpetrators told the victims that there was a mistake in their tax returns, and that they would be arrested if they did not pay up. To add urgency, the criminals claimed that the FBI was already en route to the victim’s residence. The criminals even supplied a badge number, which one of the victims Googled - and found that not only was it a fake badge number, but there were many more victims.
  • Cora Ford used her business - Genesis Tax Service - to con homeless people out of their Social Security number, date of birth and name. That information was subsequently used to file fraudulent tax returns, with the refunds being deposited directly into Ford’s personal bank account. Ford was found guilty last Friday, but has not yet been sentenced.
  • Frederick Roberts of Atlanta was able to defraud the IRS for over $800,000 in stolen refunds before he was caught and convicted. Roberts had refund checks mailed to him, which he would cash at a specific check-cashing business, despite the fact that his name was not on the checks.

After I became suspicious about my own taxes, I called the Internal Revenue Service and somebody there was able to verify that there was another return filed using my name and Social Security number. With that started a whole new chapter of my life.

The first thing the IRS does is freeze everything and start an investigation. They also gave me the number to a tax advocate. There was no cost for it, and he immediately started working with the IRS. He also helped me with my other accounts by giving me an exhaustive list of loose ends to tie up, like calling credit card companies and credit reporting agencies to freeze my credit.

After about 10 weeks, I received a special PIN from the IRS, in the postal “snail” mail, which I would have to use for all correspondences for that tax year - and they would send me a new PIN every year.

As I dug deeper into what had happened, I saw that nothing had been touched other than the tax return. I was lucky. Well, maybe “lucky” is a stretch; it took about 19 months to resolve the matter in its entirety.

The lesson I hope to bring to you is to be safe with your personal information, whether you file a paper return or an electronic one. Here are some tips from the IRS website on how to do so:

  • Check your credit report every 12 months: There are several services that will monitor your credit rating - and whether it has been checked by someone else recently.
  • Secure the physical access to your data: Things like making sure your screen goes dark after a certain amount of time, or making sure that your screen isn’t easy to view from outside, are powerful first steps in safeguarding your privacy.
  • Secure your passwords: N3v3r m4k3 P455w0rds fr0m D1c+i0nary w0rds! Most publishers have digitized their dictionaries, and identity thieves can effortlessly try countless combinations of dictionary words in milliseconds, with the click of a mouse. Choosing a long password with letters and numbers is still the best way to prevent being hacked.

Was it a pain in the neck dealing with tax return identity fraud? That’s putting it mildly. It took days of my time to check all of my credit records and to freeze my accounts, and later to unfreeze them when I was making some significant purchases that required financing. And despite a hefty tax penalty that was later rescinded, with the help of my tax advocate I made it through to the other side.

If you suspect that you are the victim of tax return fraud, visit the IRS FAQ.

Has anyone close to you experienced identity theft?

Robert D. Bordett CFP, CDFA C
ollaborative Practice and Mediation Services
888 U2AGREE (888.822.4733)

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