7 Truths about Tax Identity Theft
The Internal Revenue Service (IRS) describes tax-related identity theft as that which “occurs when someone uses your stolen Social Security number (SSN) to file a tax return claiming a fraudulent refund.”
Identity thieves file fraudulent tax returns early in filing season. Usually, the victim isn’t made aware that the theft has taken place until they find that they can’t file their own legitimate tax return electronically or they receive a letter from the IRS about the matter.
As happens with other types of identity theft, IDShield's licensed private investigators often see and hear of misinformation and misunderstanding surrounding tax-related identity theft. Because victims often have questions and concerns about tax-related identity theft and what it will mean to them, here we share seven truths that cut through the misconceptions:
1. Tax-related identity theft is prevalent. The Federal Trade Commission (FTC) reports that there were 221,854 tax or wage identity theft complaints received in 2015. That is up from 2014’s number of 109,250 complaints. Tax or wage-related identity theft has been the leading identity theft complaint sub-type in the FTC’s Consumer Sentinel Network Data Book since 2010. It appears that this is an easy and lucrative theft which makes it popular among thieves.
2.The IRS is making efforts to combat it. They state that stronger protections for taxpayers and the nation’s tax system have gone into effect for the 2016 tax filing season. Taxpayers will see some of the protections but others will be “behind the scenes.” Recently the IRS stopped an automated attack involving personal information (obtained from other sources) used by perpetrators to obtain electronic filing personal identification numbers (E-file PINs) that can be used to file tax returns electronically. The IRS stated, “We identified unauthorized attempts involving approximately 464,000 unique SSNs, of which 101,000 SSNs were used to successfully access an E-file PIN.” The IRS notified those whose accounts were targeted in this attack and proactively marked those accounts to “protect against tax-related identity theft.”
3.Tax-related identity theft victims have to file their tax returns by the deadline like everyone else. If you are told you cannot file your federal tax return electronically because the IRS already received a tax return that contained your Social Security number, you must print your return and mail it to the IRS.
4. Tax-related identity theft victims need to file an affidavit with the IRS. The IRS Identity Theft affidavit is Form 14039. Tax-related identity theft victims must complete and submit Form 14039 to notify the IRS that they are victims of identity theft. A copy of a valid government-issued identification item such as your Social Security card, driver’s license, or passport must accompany the affidavit.
5. The IRS may issue to you an identity protection personal identification number, or “IP PIN.” If you receive an IP PIN, put this on your tax return form in the space provided. This may prevent any fraudulent return received by the IRS from slowing the processing of your legitimate return. This is different from the electronic filing PIN that is required to e-file your tax return or other electronic forms.
6. The IRS will not contact you by email, text, or social media about any matter. Scammers, however, will try to reach people in these ways while pretending to be a representative of the IRS. The IRS will send a letter to you by mail if they need additional information. If you receive an email that claims to be from the IRS, forward it to [email protected] and do not respond to it in any other way.
7. Even if you experience tax-related identity theft, this is not necessarily an indicator of other types of identity theft. IDShield's licensed private investigators have talked to thousands of victims of tax-related identity theft and most find that the misuse of their identity was limited to tax issues. This is probably because it is an easy and lucrative type of identity theft for a thief to commit. Nevertheless, victims should watch for signs of additional identity theft and take precautions to reduce risk of becoming a victim of other types. What are some other steps you can take to reduce your risk of additional types of identity theft? The following are easy steps to take and are recommended by IDShield's investigators:
Placement of a fraud alert with the three national credit reporting agencies is a good idea. Then, follow the instructions you will receive when you place the fraud alert to order free credit reports from each of the three CRAs. Review your report to look for any activity that you do not recognize as your own.
To place a fraud alert on your credit report from Equifax (888-766-0008), Experian (888-397-3742) and TransUnion (800-680-7289), call just one of the three and use the automated phone system to make the request.
Check the amount of wages reported to the Social Security Administration as earned by you. If you find that more income was reported than you actually earned, this could be a sign that someone gained employment by using your Social Security number. You can check your wage information by establishing your own online account known as a “mySocialSecurity" account at https://www.ssa.gov/ myaccount/.