Sagert has been enduring the pain of a double-whammy of
a crook used his stolen ID to claim Social Security
benefits last spring. Then this tax season, Sagert was
hit with an SSA-1099 tax form for reporting the income
paid to the crook.
definitely not paying it. Iím refusing to pay
it," said Sagert, 63, of Sterling Heights, who is
the president of the Communications Workers of America
Local 4008 in Mt. Clemens.
should he have to fret about the possibility of paying
income taxes on $2,095 in Social Security benefits when
a fraudster stole the money? And why is he stuck
constantly calling and trying to straighten things out
with Social Security?
really a headache," he said.
personal data is stolen is hard to track down because ID
thieves can access the data in so many ways now.
Equifax data breach, first disclosed in September ó
which some dub as the most destructive data breach
recorded ó compromised the personal information of
nearly 146 million consumers, including some Social
consumers wondered whether someone would open a credit
card in their name or file a fake tax return to generate
a fraudulent refund using their stolen Social Security
imagined that hackers would try to make bogus claims for
Social Security benefits.
consumers who are in their 60s who have not claimed
benefits yet could be at risk for headaches involving
fraudulent Social Security retirement claims.
could get your tax refund before you even file ó but
itís not a good thing. Read more about another tax
developed a keen understanding of how to use the tax
system to their advantage several years ago. So really,
it should be no surprise if they prove to be adept at
cracking into the weak spots in the Social Security
is doing this clearly understands how the Social
Security rules work," said Mary Beth Franklin, a
nationally recognized expert on Social Security claiming
example, a person who claims Social Security after full
retirement age is eligible for up to six months of
retroactive benefits, payable in a lump sum. If you
accept that lump sum, your monthly benefit is smaller.
the cyber crooks, the payout is huge if they use the ID
of someone in that age range who isnít already
the biggest bang for the ID theft buck," Franklin
said. She wrote in her column in Investment News that
she has heard several stories from victims who are
dealing with such problems, including contesting tax
forms related to stolen Social Security benefits.
Shambo, who is a retired certified public accountant in
Colorado Springs, Colo., received a Form SSA-1099 for
$19,236 in Social Security benefits in January even
though he never submitted an application for Social
Security benefits. Shambo, 67, plans to collect at age
received a letter from Social Security on Sept. 11
congratulating him for claiming benefits. But the money
was disbursed as of Sept. 1, he said, so when he
contacted Social Security the lump sum was already paid
out. He said his benefits were deposited onto a prepaid
questioned why he didnít get a letter before the money
was paid out so he could alert the agency to the fraud.
said thereís a task force in Washington working on
this," Shambo said.
made his ID theft public with a cautionary tale in a
blog on the American Institute of Certified Public
62 and older who hasnít started benefits is
exposed," Shambo said.
how big the problem could become is unknown. The Social
Security Administration has downplayed the threat.
antifraud activities identify attempts and make this
type of activity you are asking about very rare,"
Eric Martinez, deputy regional communications director
for the Social Security Administrationís regional
office in Chicago, told me in an e-mail.
is convinced that the Equifax hacking incident ó where
hackers got access to the data sometime from May 2017
through July 2017 ó contributed to the fraud.
again, many hacking incidents have taken place over the
years, so itís hard to know exactly how your data was
the first time ever, Social Security numbers eclipsed
credit card numbers as the most breached piece of
personal information in 2017, according to a report on
identity fraud by Javelin Strategy & Research.
35 percent of breach victims reported that their Social
Security number was among the data compromised, compared
with 30 percent with stolen credit card information.
big data breach isnít the only way to get Social
Security numbers. Consumer watchdogs warned in February
that con artists claiming to be from Social Security
were trying to trick people in various parts of the
country into sharing their Social Security numbers over
the phone and through a website. Callers claim a
computer glitch requires them to ask individuals for
Social Security numbers.
Sagerts said a false tax return using their ID was filed
about three or four years ago. And now, theyíre
dealing with this Social Security mess.
wife, Janet, reached out to me by e-mail on Feb. 4 to
tell me about their runaround and the SSA-1099 that they
received in mid-January.
$2,095 that they are saying we need to pay tax on,"
Janet wrote in her e-mail.
couple had made repeated calls and visits to the Social
Security office. No one could give them a clear answer
on how to fix the 1099 mix-up. Their tax preparer at one
point suggested paying the tax and hoping it would get
straightened out and a refund would be issued later.
feel like paying the tax will make us look like weíre
admitting we got the money when we didnít," Janet
has worked for more than 40 years for AT&T and now
works full-time as the union president. His goal was to
collect Social Security benefits at age 65.
received a letter in April stating that beginning May 1
heíd receive $2,095 a month.
knew he never applied for benefits so he called the
Social Security hotline. After about the fourth call, he
said he realized he had to go to an office to get some
one point, he said, he understood that the benefits were
going to a post office box in Utah.
never been to Utah. Iíve worked for 40 years for the
at the Social Security regional office in Chicago,
declined to comment on Sagertís situation, noting that
privacy laws prevent the agency from disclosing
information on a specific personís record. But in an
e-mail sent Thursday evening, he said the agency looked
into the situation and resolved it with Sagert.
I called Sagert for further clarification, he told me
Friday he had not received any indication the situation
was resolved. But by Tuesday morning, I received a call
from his wife who was surprised to report that a revised
1099 had hit their mailbox.
think itís because you called. I canít believe we
got this," she said.
letter noted that an incorrect Form SSA-1099 was issued
for 2017 because the form was automatically generated.
But the benefits reflected on that original form
"came from a claim filed on your record by a person
other than yourself."
season can only make things tougher for ID theft
victims, as itís not obvious what to do.
on your filing status and income, up to 85 percent of
Social Security benefits can be taxed at ordinary income
tax rates. In addition, taxable Social Security benefits
can trigger higher Medicare premiums, which are based on
Social Security website at www.ssa.gov doesnít give
clear tax help to consumers who have had their data
site does give information for those who need to replace
a legitimate SSA-1099. You can use your online Social
Security account to get a replacement SSA-1099 or call
800-772-1213 Monday through Friday from 7 a.m. to 7 p.m.
to Martinez, youíd contact those same numbers or go
into a local office if you spot fraud or receive an
SSA-1099 that reports benefits that were given to
someone else after ID fraud.
Charney, director of tax law and policy analysis for The
Tax Institute at H&R Block, said the Social Security
Administration reported the phantom income to the
Internal Revenue Service on the Form SSA-1099, so it
cannot be ignored when filing a tax return.
requested that Social Security re-issue an SSA-1099 in
late January to indicate all zeros for no income to him.
He also said that the revised 1099 should show that itís
a "Corrected" 1099. He had not yet received
that revised 1099 last week. He was told it would take
30 days and expected to receive it by Feb. 25.
told me by e-mail that the agencyís Program Service
Centers can correct the 1099 to show that $0.00 was paid
and then a corrected 1099 would be mailed to the
individual. To ensure the IRS has accurate information,
a copy of the corrected 1099 would be sent to the IRS,
as early as possible ó and being as persistent as
possible ó seems to be the only option for ID theft
could need to file a Form 4868 for filing for an
automatic extension if the proper paper work doesnít
arrive in time. If you file a six-month extension, youíd
need to make sure you pay whatís required by the April
17 deadline to avoid any interest and penalties. The
taxpayer would pay the higher of the amount of tax
calculated for the 2017 tax or 100 percent of the tax
for the prior year with a federal tax extension.
Weston, director of tax practice and ethics for the
American Institute of CPAs, said the IRS does not want
taxpayers to include fraudulently reported income on
the process to get the form corrected may take months to
resolve," Weston warned.