Most people don’t know they’ve been a victim of tax-related identity theft until they try to file their legitimate income tax return. Then they discover that a tax return has already been filed using their Social Security number, usually claiming a fraudulent tax refund.
In other cases, the taxpayer receives a letter from the IRS saying it has identified a suspicious return and needs more information. You may be a victim of tax-related identity theft if the IRS notifies you that more than one tax return was filed under your Social Security number, the IRS reveals you received income from an employer for whom you did not work, or the IRS notifies you that you owe additional tax, have had collection actions taken against you or have a refund offset for a year that you did not work.
There are steps to follow if you think you’ve been a victim of tax-related identity theft. First, the Federal Trade Commission (FTC) requests you file a complaint through their website dedicated to fighting identity theft crimes at www.identitytheft.org. You will also be requested to contact one of the three major credit bureaus to place a ‘fraud alert’ on your credit records to prevent anyone (including yourself until things get sorted out) from opening a bank or credit card account or applying for a loan under your Social Security number. You should then close any financial or credit accounts that may have been opened by identity thieves.
You should respond to any IRS notice immediately, either by contacting the IRS directly or connecting with a tax preparation expert to determine your next steps. You will need to complete an IRS Form 14039 Identity Theft Affidavit in order to continue to file your legitimate tax return.
All of this sounds ominous; and it is. You should not consider responding to potential tax-related identity theft alone. If you suspect you may be a victim of tax-related fraud, contact one of our tax preparation experts at McRuer CPAs for more information.
Note: “The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels.” Quote from IRS Publication 5027