Identity Theft and Tax Time

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Waiting in my email in-box this morning was a message from the United Way of Dane County.  A weekly newsletter, it often contains usual information to my legal practice.  The top story shared news that the IRS is cracking down on identity theft this year, in conjunction with tax season.

Apparently, identity thieves steal a Social Security number and then file the 1040 before the tax payer does. The hope is that they'll collect the refund before the well meaning citizen.  The article includes tips on keeping the number safe, etc.  Reading it, two additional thoughts came to my mind, based on my experience with estate planning.

First, never create estate planning documents that contain your Social Security number.  Historically the number was included on powers of attorney as well as wills.  Occasionally I will see one of these filter through my office, created long before I entered practice.  Immediately I advise the client to create new documents.  Why?  Upon illness or death the forms are shared, and with a will, it is filed with the court.  It can become a public document, and that makes it oh so easy for a thief to steal a number.

And second, don't forget to protect EINs assigned to an estate.  Like a Social Security number, and EIN is distributed by the IRS as a unique number for tax purposes to estates, business, and other entitites.  Estates can actually generate income (sale of stock, home, interest earned on investments, etc), and must file a tax return if over a certain amount (usually $600 per year).  Just this morning my jaw dropped when reviewing an estate inventory filed by a personal representative prior to the family hiring me.  Smack dab at the top of the page is the estate's EIN number.  Yet another opportunity for a thief to steal the number, file a return, and walk off with a refund rightly owed to the estate.

Lessons to take from my post -- review documents previously created to make sure sensitive information is not included, and treat an EIN just as you would a SSN.  Thanks for reading, and remember, a blog is not a lawyer.  Please consult with an attorney in your state for advice specific to you situation.