Tax season can sometimes be stressful — even when things go according to plan — but what happens when you are the victim of tax identity theft?
Unfortunately, if your identity is stolen and used for tax-related fraud, you might never receive that tax refund. If someone used your personal information to file a fraudulent federal income tax return, you’re a victim of tax identity theft. Here’s what to do if you suspect it.
What is tax identity theft?
Instead of receiving the refund they’ve waited for, some Americans receive a rejection or notice from the IRS that states they may be a victim of tax-related identity theft because a refund has already been issued to their Social Security numbers (SSNs) that tax year.
If an identity thief has possession of someone else’s SSN, they can fraudulently receive a tax refund by filing with the stolen SSN and falsified income information.
Since only the second file will raise a red flag with the IRS, thieves try to use the information to obtain a refund as quickly as possible. Their hope is to have the money before you realize anything is wrong. By the time you receive the notice and take action, they’ll have gotten what they were after while you’re stuck with the aftermath.
It’s also possible for someone to use your SSN to apply for employment. If this is the case, their employer has reported their earnings to the IRS. When you file for taxes and there’s no income reported from the job, the IRS will detect the discrepancy and notify you with a CP01E Notice regarding unreported income.
Other forms of tax fraud
If you have dependents, their SSNs also could be used for tax fraud. Kids’ identities have become a more promising target for thieves because it typically takes longer for families to notice that a child’s personal information is being used fraudulently.
If your child’s identity has been compromised and a criminal has their SSN, they can list your children as dependents on their returns. In this situation, when you file your taxes the IRS will send a notice stating that your return contains duplicate dependents. Learn more about preventing child identity theft.
What to do if you’re a victim of tax identity theft
If you receive notices from the IRS matching any of the above situations, call the number provided immediately and follow the instructions they give you. Never respond to a notice that requests you email personal information, as this could be a phishing attempt to steal more of your personal data. Learn more about phishing email attacks.
If your return was rejected because more than one filing exists under your SSN, or you’re otherwise instructed, print and fill out the IRS Form 14039, Identity Theft Affidavit and send it in the mail.
You’ll need your IRS IP Pin to access information about your tax returns, which would have been used to file the return. If you don’t have access to the pin or don’t remember, there are ways to recover it.
For further assistance, call the IRS Identity Protection Specialized Unit at 800-908-4490. Continue to pay any taxes you owe throughout the process — you may need to do so by paper. Keep records of all correspondence.
If your identity was stolen and used for tax purposes, you’re at high risk for further identity theft issues.
The Federal Trade Commission recommends that you file the IRS Form 14039 with the IRS directly and place a fraud alert on your credit report with one of the three major bureaus. The one you contact will extend the alert to the other two.
Check all of your financial accounts for purchases you didn’t authorize, and pull your credit report to help make sure no fraudulent accounts were opened in your name.
I’m a victim. When can I expect to receive my tax refund?
Identity theft slows down your tax refund process. According to the IRS, most cases are resolved within 120 days, but more complex cases can take 180 days or longer.
Protecting your identity from tax fraud
While you can’t ever guarantee that your SSN is completely safe, there are steps you can take to mitigate the risk — and avoid tax-related identity theft in the future.
- File your taxes as early as possible. Criminals are hoping they can get away with using your SSN when filing taxes before you file your own return. Make sure their false return is the one that’s rejected by getting it done as soon as possible.
- Be careful about giving away your SSN. Ask if any other form of ID is acceptable for the entities that need it, and refrain from carrying your card around with you. Keeping your SSN safe is the most important when it comes to your personal information because it never changes.
- Beware of scammers. Identity thieves may try to convince you via phone calls, texts or emails that they’re associated with the IRS to get personal information out of you using fear tactics — one form of a method known as phishing. Know the signs to avoid it.