By Tom Andrews, CPA
For several years now I have noticed a substantial increase in the number clients that have been victims of identity theft. The identity theft I am referring to is not the type in which a perpetrator hijacks a person’s credit or bank accounts, it is the type in which an imposter files a false tax return on behalf of a taxpayer early in the year in hopes of claiming a false refund, by the time the IRS figures out a false return has been filed the refund has been cashed and the imposter is long gone. Every year I have between six to ten clients that become victims to this crime, in almost every case we are able to correct the issue with the IRS and have the clients correct tax return processed but this process takes time, up to six months in some cases.
I have found that yacht crewmembers can be particularly vulnerable, there are several reasons for this vulnerability. Crewmembers tend to travel frequently sometimes they must travel with sensitive documents that are not always stored securely. Sometimes crewmembers homes are left unattended leaving mail to pile up before someone picks it up, in other cases crewmembers have different addresses with sensitive documents being delivered to multiple locations. These types of security breaches make it easier for an imposter to get a name, address and social security number, in many cases this is all they need in order to file a fraudulent tax return.
Unfortunately even securely storing sensitive information may not prevent identity theft, many tax payers had their identity stolen at hospitals and their doctor’s offices, in many cases the information required for medical attention is the same information needed to file a tax return, in one year I had four clients that were patients of a local hospital had their identity stolen with false tax returns filed on each of them. Thankfully in almost every case the identity theft was limited to the filing of a false tax return I rarely see cases in which other aspects of the taxpayers identity is affected.
Stopping identity theft is now a tier one priority for the IRS as they have released billions of dollars in fraudulent refunds of which a vast majority of those refunds are unrecoverable. While some forms of identity theft are unavoidable I still recommend yacht crew be mindful where their mail is being delivered and take steps to limit the information they provide third parties.