You just found out that a fraudulent income tax return was filed using your name and Social Security number. It is the first time that this has ever happened to you. Now, you must focus on taking the necessary steps to clear your name.
The Internal Revenue Service (IRS) defines tax-related identity theft as the use of a stolen Social Security number to file a tax return claiming a fraudulent refund.
Tax-related identity theft has certainly become a challenge for both taxpayers and government agencies. In May 2015, the IRS indicated that criminals obtained copies of past tax returns of more than 100,000 taxpayers. The information was used to file fraudulent tax returns and approximately $50 million in refunds were processed by the agency.
You and someone you may know can be a victim of tax-related identity theft. The key is to be prepared to handle it once it is discovered. It is a time-consuming process to clear your name and resolve your case with taxing authorities. The following is a list of steps to take by a victim of tax-related identity theft:
- Remain calm
After you found out a fraudulent tax return was filed using your name and Social Security number, feeling confused and desperate among other feelings would be normal under the circumstances. However, you must remain calm to think and understand exactly what you need to do to prevent further misuse of your name and Social Security number.
- Continue to pay your taxes and file your personal income tax return, even if you must do so by paper
Thieves generally file fraudulent tax returns electronically early in tax season (usually, in January). It gives them the opportunity to file fraudulent tax returns claiming refunds before the victim files one. It also prevents the IRS from matching the information on the fraudulent tax return with other forms such as the Form W-2. Therefore, when the victim of identity theft tries to electronically file an income tax return, it gets rejected. The rejection means that the taxing authorities will not accept an income tax return electronically as they have already received and processed a particular tax return with the same name and Social Security number. At this point, you must file the tax return by paper together with any tax payments on or before the due date.
Furthermore, a completed IRS Form 14039, Identity Theft Affidavit and a copy of government-issued identification must be mailed with your tax return.
- Complete IRS Form 14039, Identity Theft Affidavit
Form 14039 is used to inform the IRS that your Social Security number (SSN) is being used by someone else to file fraudulent tax returns. The form must be completed, printed and mailed, or faxed according to instructions. It can be downloaded from the Internal Revenue Service’s website at www.irs.gov/pub/irs-pdf/f14039.pdf
A copy of a government-issued identification such as driver’s license, passport, social security card, or other valid U.S. Federal or State government-issued identification must be mailed with the Form 14039 as well.
Upon receiving the completed form and required information, the IRS will mark your account to verify questionable activity and the identity of the party filing the tax return. Additionally, the agency will assign and mail to you an Identity Protection Personal Identification Number (IP PIN).
- Get an Identity Protection Personal Identification Number (IP PIN)
An Identity Protection Personal Identification Number (IP PIN) is a unique six-digit number assigned to victims of tax-related identity theft to help prevent the misuse of the Social Security number. The IP PIN also aids the IRS to confirm your identity and continue processing your paper or electronic Federal tax return.
The agency mails your IP PIN on a CP01A Notice. The IP PIN is located on the left column, third paragraph stating: “Your assigned 2015 IP PIN is: _________”
The IP PIN is renewed annually and mailed to you each December by the IRS until the theft indicator is cleared and removed from your account.
If the CP01A Notice containing your IP PIN cannot be located, you can open an account online through the Internal Revenue Service’s website at www.IRS.gov and receive your IP PIN online.
You are eligible for an IP PIN if:
- You are a victim of identity theft and the IRS has not resolved your case. As a result, the agency mailed you a CP01A Notice, or
- You filed your Federal tax return last year as a resident of Florida, Georgia or the District of Columbia, or
- You received a CP01F Notice or a letter from the IRS inviting you to obtain an IP PIN
Once you receive an IP PIN from the agency, you must use it to file your Federal tax return either electronically or by paper. Otherwise, it will delay processing as well as any refunds claimed until the agency verifies your identity.
- Contact the IRS Identity Protection Specialized Unit
The Internal Revenue Service reported through its website that more than 3,000 employees are dedicated to work on resolving identity theft cases. Cases can become extremely complex to resolve as multiple issues and multiple tax years may be affected. In addition, the IRS faces one more challenge which is dealing with identify thieves who contact the agency. It is a time consuming process and a typical case can take up to 180 days to resolve. It is the agency’s due diligence to make sure that the correct amount of monies due goes to the legitimate taxpayer.
If you contacted the IRS and did not receive a resolution, it is recommended to contact the Identity Protection Specialized Unit at 1-800-908-4490 for further assistance.
For victims of identity theft who are not able to get the issue resolved and are facing financial difficulties, it is suggested to contact the Taxpayer Advocate Service at 1-877-777-4778.
- Request copies of fraudulent tax returns
A tax-related identity theft victim or a person authorized can request in writing a redacted copy of the fraudulent tax return. The redacted copy will have some information blacked out. However, there will be enough information to figure out how your personal information was used.
Due to Federal privacy laws, your name and Social Security number must be listed as either the primary or secondary taxpayer on the fraudulent tax return. Redacted copies of fraudulent tax returns cannot be disclosed to individuals listed as dependents.
A letter to the IRS should be sent and signed by you requesting copies of the fraudulent tax returns. The letter must include the following information:
- Your name and Social Security number (SSN)
- Your mailing address
- Tax year or tax years of the fraudulent returns requested
- The following statement, with your signature beneath: “I declare that I am the taxpayer.”
The letter must be accompanied by a copy of your driver’s license or passport.
Keep in mind that a person authorized by you can request a copy of the fraudulent tax returns as well. The letter must include the following information:
- Name and tax identification number
- Relationship to you
- Mailing address
- Centralized authorization file (CAF) number, if documentation of authorization is on file with the Internal Revenue Service covering the tax year or years requested
- Tax year or tax years of the fraudulent returns requested
- Your name and Social Security number
- Your mailing address
- The following statement, with signature beneath: “I declare that I am a person authorized to obtain the tax information requested.”
A copy of the authorized person’s driver’s license or passport must be mailed together with the letter. Additionally, the authorized individual requesting the tax information must include with the letter documents demonstrating the authorization to receive the requested tax returns. For instance Form 8821, Tax Information Authorization, or Form 2848, Power of Attorney and Declaration of Representative must be mailed with the letter unless:
- Requesting return information of a minor child as a parent or legal guardian, or
- Authority to obtain return information for the requested tax year(s) is on file with the IRS and the CAF number is being provided
The letter and required information requesting copies of fraudulent tax returns must be mailed to the following address:
Internal Revenue Service
P.O. Box 9039
Andover, MA 01810-0939
Note – the following is a list of tax returns that can be requested at this time:
- Form 1040, U.S. Individual Income Tax Return
- Form 1040A, U.S. Individual Income tax Return (shorter version of Form 1040)
- Form 1040EZ, Income Tax Return for Single and Joint Filers With No Dependents
- Form 1040NR, U.S. Nonresident Alien Income Tax Return
- Form 1040NR-EZ, U.S. Income Tax Return for Certain Nonresident Aliens With No Dependents
- Respond immediately to any Internal Revenue Service notice; call the number provided
Contact the IRS immediately upon receiving any notice either by mail or telephone. The notices will always have a phone number to call. When you call the agency you should write down:
- Date and time you call
- Name and the identification number of the Revenue Officer assisting you, and
- Ask the agent to repeat anything that you do not understand to avoid confusion which could delay the process to resolve your case
The Internal Revenue Service will only contact you via mail to request your personal information and does not initiate communication via telephone, email, text message, or social media channels.
If an agent from the IRS contacts you via email, the return email address will always contain the agent’s first name, last name, followed by “@ci.irs.gov.” It will always have an irs.gov address rather than irs.org address.
- Protect your Social Security number from being further misused
You should take all necessary steps to protect your Social Security number from being further misused. The additional steps include and are not limited to:
- Filing a police report with law enforcement
- Reporting identify theft at www.ftc.gov and learn how to respond to it at www.identitytheft.gov
- Contacting one of the three major credit card bureaus to place a “fraud alert” on your credit records:
- Equifax at www.Equifax.com, 1-800-525-6285
- Experian at www.Experian.com, 1-800-397-3742
- TransUnion at www.TransUnion.com, 1-800-680-7289
- Contacting your financial institutions and close any accounts opened without your permission or tampered with
- Registering and creating an account with the Social Security Administration to be alert for any activity that may occur through the agency involving your Social Security number
In addition, you can request to close and/or freeze your account to prevent unauthorized charges. Also, consider changing your passwords, usernames and PINs.
- “Taxes. Security. Together.”
On November 19, 2015, the Internal Revenue Service, State tax administrators and the private-sector tax industry announced a new campaign “Taxes. Security. Together.“. The purpose of the campaign is to raise awareness among individuals that routine transactions over the internet even using personal devices can expose personal and financial information.
Holiday season and tax filing season are just around the corner. It is never too early to prepare and make sure the right things are done to protect ourselves from becoming victims of identity theft. Therefore, the IRS, states and tax industry are encouraging individuals to:
- Keep Your Computer Secure
- Use security software and make sure it updates automatically; essential tools include:
- Virus/malware protection
- File encryption for sensitive data
- Treat your personal information like cash, don’t leave it lying around
- Check out companies to find out who you’re dealing with
- Give personal information only over encrypted websites – look for “https” address
- Use strong passwords and protect them
- Back up your files
Strong passwords should be used with a combination of letters, one upper case, one lower case, numbers and at least one special character. It is recommended that a strong password should be at least 12 characters long and changed at least every three months.
- Avoid Phishing and Malware
- Avoid phishing emails, texts or calls that appear to be from the IRS and companies you know and trust, go directly to their websites instead
- Don’t open attachments in emails unless you know who sent it and what it is
- Download and install software only from websites you know and trust
- Use a pop-up blocker
- Talk to your family about safe computing
The easiest way for identity thieves to obtain names, Social Security numbers, passwords, credit card numbers, bank account information and other personal information is by asking for it. They use every communication method available such as emails, text messages, and phone calls. A phony email can be sent asking you to update your personal information by clicking on the link provided which will bring you to a website that will look similar to a trusted website you recognize designed to steal your username and password. Thieves can call indicating that they represent the IRS threatening you with jail time if a payment is not made immediately. Instead, ask them to give you their name and a phone number to call back. Thieves may sound legitimate so you should be very careful.
- Protect Personal Information
- Do not carry your Social Security card or other documents with your Social Security number, if it is not needed. Do not share information on social media channels about past addresses, new car, new home and your children which can help identity criminals to impersonate you. You should shred old tax returns and other sensitive personal documentation to dispose of them. At least once a year, review your credit scores and Social Security Administration accounts to make sure your good credit and SSN are not being used by someone else.
“Identity thieves are evolving, and so must we. Everyone has a part to play,” said Commissioner John Koskinen. The process to clear your name after becoming a tax-related identity theft victim can be overwhelming. By knowing what to do and what to expect throughout the process, the stress can be minimized.
“No one of us can fight the identity thieves alone, but together we have a chance to achieve our goal of protecting taxpayers” ~ John Koskinen, Commissioner of the Internal Revenue Service.
 Source: Internal Revenue Service’s “Taxpayer Guide to Identity Theft”
 Source: The New York Times. Article printed on May 27, 2015, on page B1 headline: I.R.S. Breach Exposes Data of Taxpayers