Tax-Related Identity Theft

Tax-related identity theft occurs when someone uses your stolen Social Security number to file a tax return claiming a fraudulent refund. Often, the first indication that you have been a victim of identity theft is when e-file of your form 1040 is rejected by the IRS because a return has already been filed under your Social Security number. Other indicators that you have been a victim of identity theft include:

  1. You get a letter from the IRS inquiring about a suspicious tax return that you did not file.
  2. You get a tax transcript in the mail that you did not request.
  3. You get an IRS notice that an online account has been created in your name.
  4. You get an IRS notice that your existing online account has been accessed or disabled when you took no action.
  5. You get an IRS notice that you owe additional tax or refund offset, or that you have had collection actions taken against you for a year you did not file a tax return.
  6. IRS records indicate you received wages or other income from an employer you didn’t work for.

The IRS recommends the following steps for victims of identity theft.

  1. Contact the Federal Trade Commission ID theft hotline at 1-877-438-4338 or go to the Federal Trade Commission’s website to file a complaint online.
  2. Call the Social Security Administration at 1-800-772-1213 and tell them that someone has filed a tax return using your Social Security number.
  3. Contact the fraud departments of the three major credit bureaus:

Close any financial or credit card accounts opened by identity thieves.

If your Form 1040 e-file was rejected by the IRS because a return has already been filed under your Social Security number, you should take the following additional steps as soon as possible.

  1. Mail a paper copy of your tax return to the IRS. Be sure it is signed and dated.
  2. File IRS Form 14039, Identity Theft Affidavit. It can be faxed or mailed, but fax is recommended. The form should be signed and dated and sent with copies of two forms of identification. The identification can include a driver’s license, Social Security card, birth certificate, or other kinds of official identification. The IRS will send you a letter within 90 days of the filing.

The IRS has made some recommendations on how you can reduce your risk of identity theft.

  1. Protect your personal information. Do not routinely carry your Social Security card.
  2. Learn to recognize and avoid phishing emails. Phishing emails are used to trick victims into giving up passwords, Social Security numbers, bank account numbers, and other information. R&A’s outstanding IT department can provide training to you or your business on detecting phishing emails.
  3. The IRS never calls taxpayers with threats of lawsuits or arrests. It never initiates contact with taxpayers by email, text, or social media to request personal or financial information, so assume any contact of this type by a person claiming to be an IRS employee is a scam.

The R&A team has assisted clients (unfortunately more than a few) in dealing with tax-related identity theft. If you believe you are a victim of tax-related identity theft, or want help on avoiding scams, give us a call for some expert support and advice.

Join our newsletter for insights and information that matter to you or your business

About this Author

Susan is experienced in tax research, not-for-profit taxation, trusts and estates, and sales tax. She has prepared tax returns for pubic charities, private foundations, and charitable trusts as well as unrelated business income tax returns for numerous charities.