What Families Should Know About Tax Identity Theft

Even the most sophisticated families and private offices are not immune to tax identity theft, and paradoxically, wealth makes you a more attractive target. Tax identity theft occurs when a criminal uses your Social Security number or business EIN to file a fraudulent tax return and claim a refund.¹

With Tax Identity Theft Awareness Week occurring each January, now is the ideal moment to strengthen your defenses before filing season begins.²

The High-Net-Worth Risk Profile

Ultra-affluent families face risks that differ significantly from those of the general population. Complex structures, such as multiple entities, trusts, K-1s, and investment partnerships, create more opportunities for sensitive information to be shared across advisors and custodians. Large refunds and tax payments represent enticing entry points for criminals.

Emerging threats intensify the exposure. Fraudsters increasingly deploy AI-generated deepfake audio and impersonation scams targeting private banks and family offices.³ Compromised CPA email systems, spoofed IRS notices, and fraudulent use of business-owner EINs, including those tied to deceased family members, are all on the rise.⁴

Warning Signs of Tax Identity Theft

According to the IRS, common red flags include:

Your e-file is rejected because a return has already been filed under your SSN.¹
IRS notices referencing employers you’ve never worked for.
Unrequested tax transcripts or unexpected 1099s.
Delayed refunds or letters noting “unrecognized activity.”

When even one of these scenarios surfaces, time is of the essence.

Preventive Measures for UHNW Families and Family Offices

1. Strengthen Digital Defenses

Require multi-factor authentication across all tax portals.
Audit family members’ device security, which is often the weakest link.

2. Guard Personal Identifiers

Generally speaking, do not share SSNs or EINs. If necessary, share SSNs/EINs only through verified, encrypted channels.
Secure or destroy paper documents.
Use an IRS Identity Protection PIN (IP PIN) for all household members.⁶

3. Vet Professionals and Vendors

Confirm encryption standards and MFA access with your CPA and legal team.
Require NDAs and documented data-handling protocols for consultants.

4. Coordinate Across Your Advisory Network

Ensure tax, legal, and wealth advisors follow unified security processes.
Establish a single point of contact for all IRS correspondence, which is critical for multi-entity families.

If You Become a Victim

Act quickly:

Alert your tax preparer and file IRS Form 14039 (Identity Theft Affidavit).⁷
Contact the IRS Identity Protection Specialized Unit (800-908-4490).
Notify financial institutions and the three major credit bureaus (Equifax, Experian, TransUnion).⁸
File a police report and update all tax and credit documentation.
Review EINs for trusts, operating companies, and foundations—fraud can spread across entities.

Integrating Identity Protection Into Your Broader Wealth Plan

Identity protection is now a core component of comprehensive risk management. Discuss with your advisor:

Cyber insurance and executive identity-theft monitoring.
Digital-security training for spouses, aging parents, and next-gen members.
Periodic security reviews, best-practice discussions, and coordination with third-party specialists to ensure your protections evolve with emerging threats.

This is not just about preventing financial loss; it’s about safeguarding your reputation, continuity, and legacy.

Conclusion

Proactive protection is far less costly and far less stressful than recovering from a breach.

Speak with your Sequoia Sentinel advisory team to integrate identity- and tax-fraud protection into your holistic wealth plan.

Your identity is one of your most valuable assets; protect it with the same rigor as your portfolio.

Sources

Internal Revenue Service, “Taxpayer Guide to Identity Theft.”
1. https://www.irs.gov/newsroom/taxpayer-guide-to-identity-theft
Federal Trade Commission, “Tax Identity Theft Awareness Week.”
1. https://consumer.ftc.gov/features/tax-identity-theft-awareness
FBI Internet Crime Complaint Center (IC3), “Deepfake and Impersonation Fraud Alerts.”
1. https://www.ic3.gov/PSA
IRS Criminal Investigation, Annual Report.
1. chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.irs.gov/pub/irs-pdf/p3583.pdfhttps://www.irs.gov/compliance/criminal-investigation/annual-report-criminal-investigation-ci
BlackCloak Executive Cybersecurity Platform.
1. https://blackcloak.com/
IRS Identity Protection PIN Program.
1. https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin
IRS Form 14039 Instructions.
1. https://www.irs.gov/dmaf/form/f14039
Equifax, Experian, TransUnion Consumer Fraud Guidance.

Investment advisory services offered by Sequoia Financial Advisors, LLC. Registration as an investment advisor does not imply a certain level of skill or training.
This material is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Diversification cannot assure profit or guarantee against loss. There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses. Sequoia Financial Advisors, LLC makes no representations or warranties with respect to the accuracy, reliability, or utility of information obtained from third-parties. Certain assumptions may have been made by these sources in compiling such information, and changes to assumptions may have material impact on the information presented in these materials. Sequoia Financial Advisors, LLC does not provide tax or legal advice.
The tax and estate planning information offered by the advisor is general in nature. It is provided for informational purposes only and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation. Tax preparation is done by a 3rd party and not Sequoia Financial Group.

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