(888) 777-2099

Tag Archives: Identity Theft Prevention

Tax Identity Theft on the rise, Protect Your Information!

By ARDEN DALE

Financial advisers are seeing more of their clients fall victim to tax-identity theft, which the Internal Revenue Service calls a growing problem.

But until recently, many advisers had little experience with the fraud, and even those who haven’t dealt with it first-hand are hearing more about it from colleagues.

Thieves use someone else’s social-security number to file a bogus tax return that claims a refund. It costs victims time and money if they get drawn into administrative hassles with the IRS to straighten out their records and collect their rightful refunds.

Accountant Scott Kaplowitch, a partner at accounting and financial-planning services firm Edelstein & Co. LLP in Boston, saw his first case last summer after 20 years in practice. The IRS wrote to a client, saying the agency was suspicious because someone had filed for a tax refund using his social-security number.

“I don’t know how they knew [to flag the refunds],” Mr. Kaplowitch said.

Fortunately, the agency had refused a refund to the thief, so Mr. Kaplowitch didn’t have to go through the lengthy bureaucratic nightmare that follows when the IRS pays a refund to a fraudster. Victims can spend months or even years cleaning up their cases.

It took Florida accountant Byron Shinn eight months to help a client get back his money after thieves walked into a tax-preparation shop in California armed with the man’s social-security number and walked out with a $7,000 refund.

Mr. Shinn, who has an accounting firm in Bradenton and works with many advisers and their clients, has talked with lawmakers about tax-identity theft. He also works with local Florida law enforcement to try to stop the fraud, which is rampant in the state. He noted that many wealthy seniors now living in nursing homes are easy targets.

The National Taxpayer Advocate, an IRS watchdog group, got 55,000 requests for help with tax-identity theft in 2012. The group has seen a 650% rise in the number of identity theft cases it handles since 2008. And the IRS since last year has doubled to 3,000 the number of staffers working on such cases.

The elderly are often victims, but the young can be targets as well. Mr. Shinn is working with two clients, both high profile litigators–one in Tampa and the other in Sarasota–who filed 2011 returns that claimed their college kids as dependents. The IRS rejected the returns because it had already received others for the kids, which turned out to be bogus.

Besides turning into a major administrative hassle, the fraud caused a hitch in the clients’ overall financial plans. One of the lawyers was waiting for a $12,000 tax refund, and the other for a $30,000 refund. Both planned to use their refunds to help pay their 2012 taxes, but had to come up with money from other sources to cover the gap.

“Every one of these clients is upset and venting–I want to pay for my cruise, do this, do that,” said Mr. Shinn. “I’ve got to deliver the bad news.”

Mr. Shinn recommends that clients protect themselves with special identification numbers available from the IRS. An ID number lets a taxpayer show he is the rightful filer of a return. In 2013, the IRS has already issued numbers to more than 600,000 taxpayers who’ve been the victims of identity theft–more than twice as many as in the previous year.

Martha Ferrari, vice president of financial planning at Halberstadt Financial Consultants Inc. in Princeton, N.J., said she plans to recommend her clients get the ID numbers. She has been hearing from adviser colleagues about more cases of tax-identity theft.

“I had heard of it but didn’t give it a lot of thought until now,” Ms. Ferrari said.

Write to Arden Dale at arden.dale@dowjones.com

http://online.wsj.com/article/SB10001424127887323452204578287741586771644.html?mod=googlenews_wsj

 

 

Share Button

How safe are you medical records?

Everyone needs to take an active role in protecting their medical information. How Safe Are Your Medical Records? If you think your medical records are shielded from prying eyes, think again. Health-care providers, insurers, employers, the government, marketers, financial institutions, debt collectors and data miners are among the growing horde that can get access to… Continue Reading

Privacy and Security Budgets are 1 to 3%

Yesterday we made the assertion that hospital administrators need to take a more serious roll in safeguarding and protecting patient information.  Today, I read that privacy and security budgets are 1 to 3% of the overall IT budget.  Money speaks loudly to where people put their effort and focus. Privacy and security is last on… Continue Reading

Romanian hackers behind theft of 500,000 Australian credit cards busted in “largest ever investigation”

News outlets in Australia are reporting that a group of cyber-criminals in Romania has been busted after apparently stealing the details of 500,000 Australian credit cards. According to the Herald Sun, the group gained access to small retail outlets to pick up the details, 30,000 of which have already been used to buy goods worth… Continue Reading

American Shredding

Get a Quote

Name
Phone
Email
City
Zip
Comments
Security Code
 
Verification Complete

Submitting...