Identity Theft Can Cause IRS Problems

As the internet grows as a business medium, identity theft is becoming a bigger problem by the week. Most people, however, don’t realize it can cause you problems with the IRS.

As the name suggests, identity theft is the swiping of your identity for dubious purposes. If it happens to you, it is more or less a nightmare. The biggest worry for most people is credit accounts being opened and abused by the thief in question. This results in your credit being destroyed, which means good luck in buying a house and so on.

There are other ways identity theft can be a problem. Identity theft can really hurt you with the IRS. There are a couple of ways this can happen, so let’s take a closer look.

First, you identity can be used to create fake identities for others. It sounds like something out of a spy novel, but there is a more practical application these days. Illegal immigrants are facing new regulations in some states where they must produce proof of citizenship to receive medical service, a job and so on. Guess where they are getting it? Yes, your personal financial information is being sold to them, specifically your social security number.

So, how does this cause you problems with the IRS? This is where the second problem arises. Your social security number is also the number used by the IRS to track your earnings. If someone else is using it to get a job, the IRS is going to think you earned far more money than you are reporting on your return. Nothing aggravates the IRS more. You can expect a huge audit and pure misery until the situation is worked out.

If this nightmare scenario happens to you, are you sunk? Nope. The IRS is keenly aware of the problems with identity theft. This is particularly true since scam artists are sending out fake IRS emails to try to snare unwary individuals. If you are a victim of identity theft and start getting notice from the IRS, there is one step you need to take. You must immediately contact the IRS. If you procrastinate, the IRS is not going to be particularly sympathetic. Act now.

Once you act, the IRS will take a closer look at the earnings. They may interview the employer, but will definitely look at the location of the business. If you are in Los Angeles and the employer is in Boston, the IRS is going to let you off the hook.

Identity theft is a nightmare, so be careful out there. If you run into a problem that gets the attention of the IRS, communicate immediately with them to avoid bigger problems.

Richard A. Chapo is with BusinessTaxRecovery.com - reduce IRS debt - IRS settlements

This entry was posted on Friday, January 26th, 2007 and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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How Credit Scores Affect Mortgage Applications

With a good credit score an applicant will receive prompt response from many lenders, all of them offering low interest rates and low down payment options. The loan amount offered also may be high. On the contrary a low credit score would result in a lot of rejection from various mortgage financers. Because creditors wouldn’t come forward easily to give credit to individuals that have a history of difficulty in repaying existing loans. After all, creditors take risk when they finance mortgages against the credit history of a debtor. Naturally, they will wish to remain on the safe side and pick up less risky ones that have good credit histories. A good credit score means less chance of missing on payments and therefore less risky.

But there are some real risk takers that will come forward to finance mortgages for individuals with bad credit scores. They would charge high down payments and always high interest rates though. They may also fix additional charges for every little paper work and may charge high closing rates. The loan amount offered will also be considerably less. The individual with poor credit scores will not have much choice but to accept the terms and conditions as there are no other alternatives. This is a tight situation and to avoid this you must have a good credit score.

People with bad credit may fall in to the trap of ’secured loans’. Secured loans are the ones where the loan applicant offers an asset as collateral security. The lender becomes secure about the repayment of the loan and not the borrower. Securing a loan with bad credit score becomes easy only when the applicant is willing to offer some asset as collateral security. This again is a very dangerous situation where an individual runs the risk of losing his entire collateral asset in case of failing to pay the loan installments in time. An individual should always avoid such type of a loan.

Resort properties normally require large amounts of finance which a person with bad credit may find it difficult to obtain. So it is always advisable to keep your credit score high. Incase the credit score becomes low due to unavoidable financial reasons it can be improved upon. There is no need to lose hope simply because a person has a low credit score. If the property that he intends to buy has good equity he should go out and try to obtain finances for it. There are many sub prime lenders willing to offer their services.

For a review of your credit report as it relates to a mortgage loan and a consultation on the best loans available to you, give us a confidential, no obligation and no cost call.