Identity Theft Issues with IRS

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Identity theft is a growing problem, particularly during tax season. Tax-related identity theft occurs when someone uses your personal information, like your Social Security number (SSN), to file a fraudulent tax return and claim a refund. While the IRS has introduced measures to combat this, taxpayers must also take steps to protect their information and respond quickly if they become victims of fraud.

How Does Tax-Related Identity Theft Happen?

Tax-related identity theft typically occurs when criminals steal your personal information (often through phishing, data breaches, or other scams) and file a fraudulent tax return using your SSN. You may not realize you’re a victim until your legitimate tax return is rejected, or you receive notices from the IRS about discrepancies.

Signs You May Be a Victim

Here are common indicators of tax-related identity theft:

  • Your e-filed tax return is rejected.
  • You receive an IRS notice about tax discrepancies or a return you didn’t file.
  • IRS records show wages from an unfamiliar employer.

What to Do If You’re a Victim

If you believe you’re a victim of identity theft, take the following steps:

  1. Contact the IRS: Call the IRS Identity Theft line at 1-800-908-4490 and file Form 14039 (Identity Theft Affidavit).
  2. File Your Return by Mail: If your e-file is rejected, file a paper return to ensure your legitimate return is processed.
  3. Monitor Your Credit: Check your credit report for unusual activity and consider placing a fraud alert or freeze with credit bureaus.
  4. Report the Theft: File a report with the Federal Trade Commission (FTC) at IdentityTheft.gov.
  5. Follow Up: Cooperate with the IRS throughout the resolution process, which can take several months.

IRS Measures to Combat Identity Theft

The IRS has introduced several initiatives to help prevent tax-related identity theft:

  • Identity Protection PIN (IP PIN): A six-digit code that protects your tax return by verifying your identity.
  • Enhanced Verification for E-Filing: Stronger security measures for electronically filed returns to prevent fraud.
  • Taxpayer Protection Program: If suspicious activity is detected, the IRS may ask you to verify your identity before processing a return.

How to Protect Yourself

To minimize the risk of tax-related identity theft, take these precautions:

  • Safeguard your personal information and be cautious with SSN sharing.
  • File your tax return early to beat potential fraudsters.
  • Use secure, encrypted internet connections when accessing financial information.
  • Regularly check your IRS account for unusual activity.

Tax-related identity theft is a serious issue that can cause financial complications and delay refunds. Understanding the warning signs and taking proactive steps, like using an IP PIN and monitoring your tax account, can help protect you from fraud. If you suspect identity theft, act quickly to resolve the situation with the IRS and safeguard your tax account in the future.


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