People who have read my multi-part series on Wendy Boka, the widow who went through an identity theft nightmare with the IRS, often ask if there’s anything they can do to protect themselves from something similar happening to them.
In the case of what happened with Wendy, the answer is, unfortunately, that there’s very little you can do.
Identity theft on tax returns (meaning, someone filing a fraudulent tax return using your name and Social Security Number) falls under two broad categories:
- People who got your information through “traditional” ID theft. “Traditional” is the term I am using here to describe a situation where someone stole your purse or your wallet, or got ahold of sensitive documents.
- Your spouse or loved one dies and a thief gets ahold of their name and Social Security Number through the Death Master File, which is published by our wonderful, helpful government and is a treasure trove for thieves. This is what happened to Wendy — her husband Brian died and someone got ahold of his name and Social Security Number, almost certainly from the Death Master File.
With category 1, your best defense is the common-sense tips about safeguarding your information. The IRS offers a variety of tips on this webpage.
Category 2 is much harder to defend against. One tax pro I was talking to about Wendy’s situation speculated that the only way to protect yourself would be to file a tax return as soon as possible in January, even if you had to report all zeros because your documents weren’t available yet, and then amend later to report the correct information.
For example, let’s say Annie and Al are married. Al dies during 2013. In order to protect against anyone who might have stolen Al’s identity from the Death Master File, Annie files a tax return as soon as the IRS will start accepting 2013 tax returns, even though she doesn’t have all of her documents yet. She’ll file an amended tax return as soon as she gets all of the documents.
This could, theoretically, block an identity thief from filing a return in Al’s name.
I am using this example hypothetically. DO NOT TRY THIS AT HOME!!!!!!!!!!!!!!!!!!!!
This example was pure speculation in a conversation I had with another tax pro. I have no idea if this would work, or if it would even be legal, since you’re supposed to file a complete and accurate tax return and you would be knowingly NOT filing a complete tax return.
I suppose if you attached a Form 8275 to tell the IRS what you were doing, maybe it would be okay. I don’t know.
And isn’t it sad that our government’s publication of deceased people’s names and SSNs causes us to speculate about doing such things in the first place?
I’m open to suggestions from readers: what options do you think people have for protecting against a deceased person having their identity stolen?
“This blog post, along with comments that may follow, should not be considered tax advice. Before you make final tax or financial decisions, please secure a professional tax advisor to give you advice about your unique situation. To secure Jason as your accountant, please click on the ‘Services’ link at the top of the page.”