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Identity Theft Protection, IRS style

Sun, Jan 06, 2013 at 1:50PM

A couple of weeks ago I received a letter from an insurance agency with whom I had a policy for all of one month.  It turns out they had their database hacked and mine was one of many files to be compromised.  Everything was exposed - name, address, social security number, birth date.  They were very sorry, of course, and promised it would never happen again, but meanwhile I sit in dreaded anticipation of having my identity (and credit) stolen.

Identity theft is an insidious and increasing problem.  In fact, it is the fastest growing crime in America with approximately 15 million American residents having their identities used fraudulently each year and financial losses totaling over $50 billion.  These are sophisticated, professional thieves, often in an organized crime ring.  Such theft can affect far more than your credit rating.  It can affect cell and landline phone service, television services, utility services, medical insurance, and so much more.  It can even impact your tax situation as well.  

The IRS has recognized the pervasiveness of this crime, and they are implementing rules and guidelines to help reduce the risk.  On January 7, 2013, they will publish in the Federal Register proposed regulations creating a new taxpayer identifying number known as the TTIN, or truncated taxpayer identification number.  Basically, it will permit a filer (a person required to report a transaction such as a corporation or financial institution) to use only the last four digits of a payees social security number instead of the whole number.  For example, if you receive a 1099-R showing pension or IRA distributions, it may not necessarily show your entire social security number as required in the past.  Or your home mortgage interest statement may have only the last four digits instead of all nine.  These are forms that may pass through many hands before and after reaching yours, and this proposed regulation will help safeguard the most vital number you have.  

This is just one of the steps the IRS is taking to help secure your information.  Check out their Identity Protection webpage to view their suggestions to help you avoid becoming a victim.

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