More and more taxpayers are having their timely filed returns rejected because someone has already filed an income tax return using their social security number. Sometimes this is an honest accident when filling out the return, but it is becoming an increasingly common tactic used by identity thieves to file fake tax returns with false income and withholding information in order to generate fraudulent refunds before the actual taxpayer files their return.

Due to the increasing problem of people filing fraudulent returns with stolen or otherwise obtained social security numbers, the IRS has an “Identity Theft Affidavit” Form 14039 that can be filed to obtain a PIN (personal identification number) that must be used when filing their individual federal income tax return. The affidavit requires the filer to answer whether they have been a victim of identity theft and it is affecting their federal tax records or have experienced an event involving personal information that may in some future time affect their tax records. The second box is checked in situations where an individual may have been involved in a theft or robbery. Taxpayers must also submit a copy of their passport, social security card, license or other government identifier.

There are several other events that may have occurred which would cause someone to consider filing this form. Social security numbers of deceased taxpayers are easily obtainable and have been used to file fraudulent returns. There have been several well publicized data breaches by banks and retail stores, although not all have social security numbers attached to them. Also some taxpayers may be in high risk professions or businesses where social security numbers are frequently used.

The filing of the form will hopefully prevent someone else from getting a refund using the social security number of the taxpayer. Although it is a nuisance and requires some additional time communicating with the IRS, a taxpayer who has had their social security number fraudulently used on a tax return, will get their refund after 4 or 5 months.

There are several items that taxpayers who file the affidavit need to be aware of. Once a PIN is obtained, it must be used for all future filings. You will not be able to e-file and it will get rejected if you have a PIN and do not use it on the return. A paper filed return with a PIN may be subject to more screenings to verify your identity. If a PIN is lost, the IRS has a website where you can obtain your current PIN by answering a series of questions.

To minimize the chance of becoming a victim of identity theft, start by not carrying your Social Security card or any document(s) with your SSN on it. Also, don’t give a business your SSN just because they ask. Give it only when required. You should protect your financial information, and check your credit report every 12 months. You should also secure personal information in your home, and protect your personal computers by using firewalls, anti-spam/virus software, update security patches, and change passwords for Internet accounts. Also very important, don’t give personal information over the phone, through the mail or on the Internet unless you have initiated the contact or you are sure you know who you are dealing with.

If you think you are a victim of identity theft and/or you believe your tax records have been affected, please contact us and we can help determine whether a PIN makes sense.