Tax & Unemployment Fraud on the Rise

Mar 24 2021 in Financial and Retirement Planning, Madison Insight by

Recent news headlines and government officials alike are warning people to watch out for employment-related identity theft and tax fraud. Scams come in various forms via telephone and emails and can include an email or letter confirming a PIN resent, a denial of benefits letter, a claim verification for an employee who doesn’t work at the business, or a 1099-G tax form listing benefits never applied for or received. Do not discard any mail from a government agency as it could be your first indication that fraud is occurring.

Why is tax and unemployment fraud on the rise? Today, the majority of Americans file their tax return online. Criminals might have enough of your personal information to do so as well, due to both the increase in data breaches across the board as well as the increased frequency of social security numbers being used for identification. The importance of proactively preventing fraud, as well as acting immediately if there is a red flag indicating that you have become a victim of fraud are key. What can you do? We have gathered the subsequent steps and resources for you.

Take Steps Proactively Towards Fraud Prevention

Help safeguard your identity, and add a level of protection over your assets.

Some prudent steps include:

  • Monitor your financial accounts regularly. This will serve to create checks and balances that your assets are in order and there are no discrepancies in your financial affairs.
  • Secure your credit. Credit reports can be one of the best ways to detect theft that may otherwise go unchecked. The federal Fair Credit Reporting Act (FCRA) requires that U.S. consumers be entitled to a free credit report each year. Consider taking advantage of this requirement by utilizing one of the free credit reporting services available online. Many consumers rely on the website annualcreditreport.com for credit reporting. Checking your credit at least once per year will help identify changes in your credit history and may alert you to attempted use of your identity to obtain credit.
  • Sign up for the IRS’s new Identity Protection Pin. It is now available to all taxpayers in every state for the first time. Prior to this year, most states required that you already had to be a fraud victim to sign up.
  • File taxes as soon as possible to prevent criminals from filing your return. If possible, do not wait until the May 17 deadline for 2020 federal returns.
  • DO NOT provide payment through wire transfers, prepaid money card, or gift card to anyone posing as the IRS. The IRS does not make demands for tax debt to be paid using these methods. Furthermore, the IRS will only contact you via regular mail. They do not use email, text messaging, or social media to collect personal information. Both the IRS and Federal Trade Commission (FTC) have issued warnings about fake calls and emails that are duping citizens into paying money that they supposedly owe. If called, develop a spoken line of defense. It’s helpful to have a prepared response for potential fraudsters like “I run everything by my CPA or my wealth advisor, I’ll get back to you.” Legitimate business owners will understand and respect the extra level of care you exercise.

What to do if You Are a Victim of Fraud 

Take a deep breath and follow these actions to help protect your assets and minimize potential damage:

  • Contact the company where you know fraud occurred. Call their fraud department and notify them that someone stole your identity. Ask them to close or freeze your accounts so no one can add new charges unless you agree. Update all your logins, passwords, and PINs for your related accounts.
  • Report identity theft to the FTC by going to Identitytheft.gov or calling 1-877-438-4338. Include as many details as possible.
  • File a fraudulent claim through your state’s unemployment department. For example, if you live in Ohio, call toll-free (833) 658-0394 or visit unemployment.ohio.gov. If you live in Virginia, go to vec.virginia.gov.
  • File a police report with your local police department and ask for a copy so that you may show creditors and credit agencies. Go to or contact your local police office with:
    • A copy of your FTC Identity Theft Report
    • A government-issued ID with a photo
    • Proof of your address (examples include mortgage statement, rental agreement or utility bill)
    • All other proof you have of the theft including bills, IRS notices, etc.

To protect yourself and your family, be proactive in guarding your personal and financial information. And as always, please rely upon your Madison team as an additional resource should you have questions or encounter indications of fraud or identity theft. Our experienced, credentialed team of professionals are here to help.

Important Note: This material is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Madison Wealth Management does not provide tax, legal or accounting advice. © 2021 Madison Wealth Management

 

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