Tax Identity TheftFinding out that your identity is stolen can be a terrifying experience. Tax identity theft occurs when someone uses your Social Security number to file a fraudulent refund. The damage to one’s finances as a result of identity theft can be devastating for the individual; someone can open fraudulent bank accounts and lines of credit, racking up charges and expenses before the victim is even aware of the data breach. It can also create filing complications and impose additional efforts on the IRS. When your identity is stolen, paperwork has to be filed so that the IRS knows they’re sending documents to the right individual or business—increasing staffing expenses for the federal government. Because of the prevalence of identity theft and the burden placed on the government, the IRS has started to combat tax-related identity theft with prevention strategies. However, the responsibility of resolving tax identity theft ultimately falls on taxpayers.
How to Prevent IRS Identity TheftWhen it comes to protecting yourself from fraud, it’s important to understand the IRS identity theft process. Scammers will try to obtain your personal information through fake charities, bogus emails, and various forms of online hacking. Without your Social Security number, address, phone number, and other personal information, a scammer won’t get very far. Here are some measures you can take to prevent leaking any of this vital information to the wrong people.
- Don’t fall for scams: The easiest and most common way for identity thieves to scam people is to obtain information through a con. Fake charities or phishing campaigns are some of the most common ways identity thieves go about their business. Be aware of the signs of scamming and don’t give out any personal information to a solicitor.
- Protect your data: The simplest way to prevent IRS identity theft is to safeguard information like your Social Security and tax ID number. Make sure your computer has the latest security, and don’t visit questionable websites.
- Report suspicious activity: If you suspect that an organization or individual is stealing identities, report it to the authorities immediately. Preventing the spread of identity theft for others will reduce the rate at which it happens, so make sure you report with the FTC in addition to the police.
How Do I Know When Tax Identity Theft is Happening to Me?There are several warning signs:
- If you find out more than one tax return has been filed with your Social Security number, you may have fallen victim to Tax Identity Theft.
- The IRS indicates that you received wages from an employer you don’t work for.
- You happen to owe additional taxes, refund offset, or had collections taken against you for a year(s) that you did not file a tax return.
What to do if You’re the Victim of IRS Identity TheftEven though you may have lost your identity, you can still get it back. As the victim of identity theft, there are measures you can take to resolve your situation.
- Report ID theft to law enforcement: You may not be the only target of a particular scam, and the information you provide could be the missing piece the police need to find those responsible.
- IRS Form 14039: When someone fraudulently uses your Social Security number to file a tax return, report it to the IRS immediately. File a Form 14039 with the IRS to notify them of your identity theft. The form is an identity theft affidavit that legally declares your circumstances to the IRS.
- Pay attention to notices: Once the IRS has confirmed your identity, they will send you essential notifications that contain secure information regarding your taxes and ID numbers. Check in with the IRS and make sure you’re receiving all the letters they are sending.
- IP PIN: Once the IRS has confirmed that you are the victim of tax identity theft, they will send you a unique six-digit number so that you can safely and securely file your taxes.
- Refund offset: As the victim of tax ID fraud, the IRS may be willing to forgive some of your debt with a refund offset. Not every individual or situation will allow for an offset, but it’s worth consulting a tax professional to see if you qualify.