After last month’s discussion of school credits, I was planning to follow up with some other credits that you can use in Arizona. But the news sometimes diverts attention from a well-planned timeline. (I’m shooting for November for a further discussion of tax credits.)
This month, we have to talk about Equifax. We have to talk about Equifax. Yes, I repeat myself, but this is huge – it requires repetition. Equifax revealed that 143 million credit files, or at least major parts, have been breached. So what do 143 million credit files, or at least the parts that matter: name, address, birth date, social security number and driver’s license number, mean for taxes? A lot, a whole lot. For some background: according to Wikipedia, there are approximately 245 million adults in the United States and the IRS shows a little over 150 million returns filed during 2016 (for 2015 tax year). 143 million Equifax credit files means that nearly as many individual credit files – or profiles – were included in the breach as tax returns filed. It means that you, personally, have a one in two chance of your credit information floating around the Internet now. It also means you have a one in two chance of someone filing a false tax return with your information, claiming a refund. And you will start out on the hook for the excess refund. An IRS article from January, 2016 states, “For several years, the IRS has fought aggressively against refund fraud, which includes identity theft. In calendar year 2015, through November, the IRS rejected or suspended the processing of 4.8 million suspicious returns. So far, we stopped 1.4 million confirmed identity theft returns, totaling $8 billion. Additionally, through November we stopped $2.9 billion worth of refunds in other types of fraud. That’s a total of $10.9 billion in confirmed fraudulent refunds protected.” So IRS might catch it, they might not.
The bigger picture is that your personal information could be used as ID when someone gets arrested, rents a house and doesn’t pay or visits the hospital and skips out on the bill. I encourage you to visit the credit reporting agencies, placing a fraud alert (if it seems reasonable) and perhaps even a freeze in your credit file. It creates a hassle, sure, but it reduces your potential as a victim.
October is the season of ghouls and goblins, mummies and werewolves. I’m going to tell you about something even scarier: Congress. In December of 2015, Congress, perhaps invaded by body snatchers, passed a law that sends your overdue tax bill to private collection agencies. IRS never used to “sell” your data, never used to use outside collection agencies, never used to contact you via email. Now we can’t trust that any of these things are true. Even worse, at the same time as scammers are calling taxpayers to convince them they will be arrested if they don’t meet the tax collector on the corner to hand over payment in Green Dot cards, IRS will now accept payment at participating 7-11 stores. So you can get a Slurpee, a hot dog, some candy corns (as Halloween approaches) and pay up to $1,000 towards your tax obligation. And it might actually not be a scam.
Equifax has launched a web site for people to check to see if their information has been release and an offer for credit monitoring at: https://www.equifaxsecurity2017.com/ Some of the sources I read and listen to are recommending against using this site… I spend many hours, days really, every year learning about the latest scam, data breach and ransom software so my team can protect our clients’ data. It’s a lot of work, lots of discussion and annual trainings. We have to stay up to date with best practices as defined by IRS and FTC among others. And some of these sources are saying, “Use it with caution.” The IRS has an identity protection page as well: https://www.irs.gov/identity-theft-fraud-scams/identity-protection Use the Equifax site with caution, file your tax return early to head off the scammers and bring any letters from IRS for us to interpret for you.
Oh, and Happy Halloween. FBN
By Patrick Fleming, EA
Patrick Fleming, EA, is a partner at Northern AZ Financial Services Co, www.northernazfinancial.com. He can be reached at 928.526.3999.