Identity Thieves Use Children’s Information to Commit Tax Fraud
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It’s been a rough year for L. Katz. In April 2011, thieves broke into her apartment. They not only stole her jewelry but also the birth certificates, passports, and Social Security cards belonging to Katz and her two daughters, now ages 6 and 11.
Katz immediately filed a police report and a 90-day fraud alert with the credit agencies. However, she didn’t know until nearly a year later that she and her family had become victims of identity theft, child identity theft, and identity tax fraud.
First, this past February, Katz was notified that she was being sent to collections for a credit card that someone else had opened in her name. Then, in the beginning of March, Katz filed her taxes electronically and got back an unexpected note.
“When I filed my taxes, I was rejected,” she says. “It said someone had used my daughter’s Social Security number.” As of March, just one daughter’s number had been used to file false taxes. She is waiting anxiously to see if her other daughter’s identity has been compromised as well.
Katz feels frustrated by the sheer number of agencies she had to contact and the number of forms she had to fill out to try to clear her identity. She’s also concerned about her children’s future.
“It affected everything. I was so completely overwhelmed by it,” she says. “With the kids, it’s more complicated. My concern is, what’s going to happen when they are 18? Are they going to have messed up credit?”
Understanding child identity theft
Identity theft–when someone uses another person’s name, Social Security number, or other personal information to commit fraud or other crimes–is one of the fastest-growing crimes in the United States. Of all identity theft complaints received by the Federal Trade Commission (FTC) in 2011, about 8 percent were cases of child identity theft.
Children are prime targets because, unfortunately, they’re easy to take advantage of. If a thief steals a child’s identity and Social Security number, the thief can set up credit in his own name. A parent might not even realize that a child’s identity has been compromised because there would be no reason to check the child’s credit activity. When the child turns 18 and is ready to apply for a credit card or take out a car loan, he or she might find a legal morass waiting.
A growing subset of identity theft is government identity theft or tax fraud. Thieves will try to use a stolen Social Security number to claim a child who is not theirs on their tax return. They will then file for the Earned Income Tax Credit and other tax credits to garner a higher tax refund.
“Especially during tax season, we see more cases involving minors,” says Gabby Beltran, a public information officer for the Identity Theft Resource Center. “Parents submit tax returns and they come back rejected because someone else already filed a return using that Social Security number or someone else already claimed their child as a dependent.”
If you think your child might have tax issues related to identity theft because his or her Social Security number or other personal information was stolen, let the IRS know as soon as possible. Contact the agency’s Identity Protection Specialized Unit at (800) 908-4490 and visit irs.gov/identitytheft. In addition, if the IRS sends you a notice alerting you to possible tax fraud, respond immediately to the name and number printed on the notice to set up an identity theft report.
“Identity theft on the whole is something the IRS takes very seriously,” says an IRS spokesperson. “It’s a very high priority here, and we’ve been doing a lot to address the situation. It is important to know that if [identity theft victims] are due a refund, the IRS will get them their refund. It just may take some time.”
The IRS says it has added new identity theft screening and compliance filters that will help agents spot false returns before they are processed. The agency is also working to speed up case resolution and to secure accounts by placing an identity theft indicator on violated accounts for at least three years. And the IRS also has a test initiative underway to give victims a personal identification number to use when filing their taxes.
For more information about Child ID theft and how to protect your family, visit Equifax’s Family Plan.
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