Mr. Jones was cruising down the interstate, obeying all traffic laws, when he was pulled over by a state trooper. Baffled, he was informed that he was wanted on an outstanding warrant from a state he had never visited. He tried to explain that there must be a mistake, but the trooper would not hear of it.
The Internet is brimming with stories of innocent people mistakenly arrested due to identity theft. Some of these poor folks spend as much as two weeks in jail while their identity is straightened out!
Many think when your identity is stolen, it’s simply a matter of clearing up your credit. The dark side, however, is your identity can be used by someone committing a crime. The days of simply using one’s identity to obtain credit and stealing from lenders are over—that’s just the tip of the iceberg. Today, identity theft is being used to obtain jobs, file for income tax refunds, and even as cover for crime sprees.
The IRS uses your social security number to track your earnings and taxes paid. So how do you protect yourself in this age of readily available information floating around?
Keep in mind that the IRS will never contact you by telephone, email or social media; they will send you a letter through the U.S. Mail. If you receive a letter from the IRS, you must act quickly. If someone is using your social security number to obtain a job, the IRS will likely contact you about missing income on your tax form. If the thieves beat you to filing for a refund, you will receive a letter stating that more than one return was filed.
One way to protect yourself is to obtain your Social Security benefit statement on an annual basis and check your earnings report to make sure they are accurate. You should also obtain your free credit report once a year. It is much easier to review now than wait until you realize you have become a victim of identity theft. If you feel your social security number is being fraudulently used, contact the IRS immediately. They have specialists trained to help correct your tax situation and get you any refund you are due. According to the IRS website, there are more than 1,800 active cases of identity theft for refund fraud… and the number is rising.
Repairing your identity can take upwards of 800 hours of your time and energy. After you contact the IRS, the next steps are to put a fraud alert on your credit reports and create an identity theft report by filing a complaint with your police department and the Federal Trade Commission.
To better protect yourself, keep paper copies of your taxes and personal information locked up. If you keep electronic files, make sure they are encrypted—and save a backup in case of a hard drive crash. When you are ready to dispose of your computer, wipe the hard drive clean. Keep in mind that deleting the hard drive will not remove the information. There are special utility software programs that would be well worth the money to use prior to disposing of any electronic devices. Make sure any paper backups are shredded properly.
Be vigilant with whom you share your personal information—especially your social security number. If no business reason exists to provide this information, don’t! It’s getting easier and easier for information to fall in the wrong hands… and you could find yourself trying to explain to an officer that it was not you on that crime spree. iBi
Daryl Dagit is market manager and financial advisor at the Peoria office of Savant Capital Management. He can be reached at (309) 693-0300.