Global Tax Insights
Help! I’m a Victim of Tax Identity TheftJune 16, 2016
You may know how to avoid ID theft, but what if your efforts fail to protect you from Tax ID theft? Learn what you can do if you’ve fallen victim to a tax identity scam.
Okay, so we’ve all likely been told countless tips and ways we can prevent identity theft, right? But what if you do become victim to a tax related identity theft, what happens then? Though the bulk of the 2015 filing season is over, you might still be dealing with some aftermath of an ID theft attack. Though no one wants to deal with identity theft, there are some ways you can cope with your situation.
First thing’s First
So, you did everything everyone told you, avoided all identity theft risks you could, but how can you be sure you aren’t a victim of tax ID theft?
Here are some tell-tale signs that you are a victim:
- You receive an IRS notice or your return is rejected- There are things called “identity theft filters” which are applied to all tax returns at processing, and if one of these filters stops a return, it triggers a notice and can even result in the return being mailed back to the taxpayer for verification of identity or other additional information needed to process the return.
- Suspicious Taxpayer numbers- TINs and EINs - tax and employer identification numbers - are assigned by the IRS to persons and business entities for identification purposes. There have been over 6,000 confirmed suspicious numbers to date. After extensive research, if the IRS determines that an EIN belongs to a fictitious business, it is designated as “suspicious”. In order to detect ID theft, this suspicious EIN is used to pinpoint any returns with income reported with that EIN. The real taxpayer is then alerted through an IRS letter that his/her income has been reported with a suspicious identification number.
- You suspect something suspicious yourself- Either you or your tax preparer might notice something odd which can be as simple as an unusual delay in receiving your refund, an e-file rejection indicating a duplicate return filing, an IRS notice showing underreported income, receiving a tax transcript from the IRS that was never asked for, or fictitious employee notices. There is a long list.
Report ID Theft RIGHT AWAY
Once you realize your account has been breached and your returns have been fraudulently filed, report it as soon as possible!
A few pointers:
- If you received an IRS notice in the mail, contact the number listed and follow the instructions they give you. IRS will never call or email you for information.
- If you have suspicions that your ID has been stolen, contact the Identity Protection Specialized Unit (IPSU) at (800) 908-4490.
- If you cannot get in touch with the IPSU, you can submit Form 14039 with help of your tax preparer to complete it and mail/fax it to the right group at IRS.
- If all these methods fail, contact the Taxpayer Advocate Service (TAS) by visiting their local office or calling them at (877) 777-4778.
What is the IRS doing to tackle this issue?
The IRS is working to combat this issue by:
- Placing identity theft “markers” on taxpayers’ accounts. The IRS places such a marker on your account and then monitors return filings and requests for tax transcripts through the Transcript Delivery System (TDS). These markers will track and manage identity theft incidents.
- Requiring Identity Protection PINs- For social security numbers that have been compromised, the IRS will issue a PIN # to be used with the tax return filing. Taxpayers with an IP PIN requirement must use the PIN entry for Forms 1040, 2441, and Schedule EIC. It does not matter whether the SSN is entered for a primary taxpayer, spouse, or dependent, the IRS is requiring the use of IP Pins for these individuals.
- Tax software companies- These companies are also making a huge effort to heighten their ID requirements and validation procedures to tackle the tax identity issue.
If you are or have been a victim to this terrible crime, the IRS just started allowing some taxpayers to request a redacted copy of a fraudulent return filed under their tax ID number. This information will help you assess how you’ve been affected by the criminal’s reporting on the false return.
Questions on tax ID theft? Wondering how you can further protect your finances? Contact us.
Don’t forget to check out our blog on preventive tips.