The Internal Revenue Service brings both good news and bad news: Identity theft via individual tax returns is falling, but business-related tax-return identity theft is on the rise. Identity theft is often catastrophic for individuals because the thieves can use personal financial information to ruin them. More insidious than conventional identity theft, Medical identity theft can throw debtors into New York bankruptcy because medical records are sometimes not well protected. The IRS is particularly concerned about identity theft because thieves sometimes file bogus tax returns in other peoples’ names to collect their refunds. Here are details from the IRS’s press release on the subject.
In the first seven months of 2015, 297,000 people reported their identities were stolen for tax-related thefts, and in 2016, that figure fell to just 204,000. By comparison, the total number of identity thefts (all kinds) was about 250,000 in 2007, so as a phenomenon it’s grown substantially in the last decade. This year, however, only 107,000 Americans reported that their identities were stolen, a 47 percent decline.
Conversely, business-related tax-identity theft has more than doubled since 2016—and grown more than tenfold since 2015. The IRS has noted 10,000 potential cases of business-related identity theft in the first half of this year, compared to 4,000 throughout last year, and just 350 the year before. The dollar-amounts involved in business-related identity thefts are quite high. This year, the amount stolen may be $137 million for 2017, $286 million for 2016, and just $122 million two years ago. At the present rate, it appears the total amount stolen will be less than last year, but more businesses appear to be affected.
The most commonly attacked entities are corporations, estates and trusts, and partnerships. Identity thieves are becoming savvier at stealing data on businesses, including taking it from tax-preparation services themselves. In these situations it’s very hard for third parties to recognize identity theft because the information used ultimately comes from the businesses themselves.
To protect businesses, the IRS is promoting a “Don’t Take the Bait” campaign, which focuses on preventing phishing attacks, using secure passwords to protect information, and relying on effective anti-malware software.
The IRS’s press release is here.
Businesses might have better odds of surviving a tax-related identity theft than individuals do, but the amount of money lost can be quite staggering and difficult to detect at first glance. If you or your business is struggling to repay debts due to any kind of identity theft, then discussing your situation with an experienced New York bankruptcy lawyer can help you assess your options.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.
