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In 2001, Brooklyn’s Abraham Abdallah took identity theft to new heights by exclusively targeting celebrities like Steven Spielberg, Oprah Winfrey, and Warren Buffett. Over six months, he used cell phones, delivery services, and faxes to gain access to 217 high-profile accounts, aiming to steal over $22 million. Abdallah’s scheme, one of the earliest digital-age identity theft cases, was cut short when he was caught before completing the fraudulent transactions. He pled guilty to wire fraud, credit card fraud, and identity theft, ultimately serving 11 years in prison.
It’s 23 years later and the means of identity theft have evolved into a much more sophisticated threat. With dark web marketplaces selling exposed personal information to the highest bidder, new technology making data breaches easier, and Artificial Intelligence generating convincing phishing emails, the risks are now more dangerous than ever.
In this blog, we’ll discuss what can happen when your identity is stolen by a third-party (the scammer) and is used to create an online IRS account in your name.
What Are Third-Party Online Account Schemes?
A scammer opens an IRS online account, but instead of using their own info, they’re using yours. You’re the one who’s had their personal data swiped, and they’re the parasite leeching off it.
Here’s how they do it:
Identity Theft
The scammer first snags your personal details—like your Social Security Number (SSN) or date of birth. They might get it through phishing, hacking, or buying it from some corner of the dark web. In the 2024 Dirty Dozen, the IRS specifically warns about shady characters offering to “help” you set up your IRS Online Account. These scammers make the process of opening an account seem like a complicated task that necessitates their assistance.
Account Creation
Armed with your info, the scammer strolls over to the IRS website and sets up an account as if they’re you. Now they’ve got access to all your tax records and any refunds you’re supposed to get.
Refund Theft
So, you’re due a refund. Guess what? The scammer reroutes that cash straight into their own pocket. And if they’re feeling the need for some extra cash, they might even file a fake tax return in your name.
Access to Sensitive Information
It doesn’t stop at stealing your money. This scammer can now dig through all your personal info, opening credit cards or taking out loans in your name.
Why Are These Schemes So Dangerous?
Loss of Money
When a scammer swipes your tax refund, it’s not just gone—it’s gone for months. The IRS is not known for sorting out these things quickly.
Identity Theft
Once scammers get their hands on your personal information, the consequences can be devastating. They can steal your money, ruin your credit, and open new accounts in your name.
Legal Complications
If someone files a fraudulent return in your name, you may find yourself facing significant legal challenges and IRS audits. Unfortunately, this can lead to a stressful and complicated situation that requires careful attention and legal assistance to resolve.
How to Protect Yourself
Guard Your Personal Information
Keep your SSN, date of birth, and other sensitive info under lock and key. Securing your personal information is the first line of defense.
Monitor Your Accounts
Regularly check your IRS account and financial statements for anything that looks off. If something’s fishy, report it immediately.
Be Wary of Phishing Scams
Scammers are like cockroaches—they’re everywhere. Don’t fall for their fake IRS emails asking for your personal info. If it looks suspicious, delete it and move on.
Enable Multi-Factor Authentication (MFA)
If the IRS or any other service offers MFA, use it. Sure, it’s an extra step, but if it makes the scammer’s life even slightly harder, it’s worth it.
What to Do If Your Identity Has Been Stolen and Used to Open an Online IRS Account
Contact the IRS
Get on the phone with the IRS ASAP and report the issue. They’ll help lock down your account and start the process of getting your refund back.
Place a Fraud Alert
Call one of the major credit bureaus (Equifax, Experian, TransUnion) and put a fraud alert on your credit report to protect against further unauthorized activity.
File an Identity Theft Report
Head over to the Federal Trade Commission’s IdentityTheft.gov site to report the theft and start the recovery process.
Monitor Your Credit
Keep a very close eye on your credit reports for any suspicious activity, to catch any further attempts at identity theft early. More than one scammer at a time can use your stolen identity.
How Paley & Prehn Can Help You
Our experienced attorneys are here to guide you through every step of the recovery process. We can help you navigate the complex legal landscape, work directly with the IRS to resolve issues, and take action to protect your financial future. Whether you’re drowning in paperwork and need assistance filing reports, disputing fraudulent accounts, or defending against potential legal complications, Paley & Prehn is committed to providing the expert legal support you need to regain control and peace of mind.