Tax Identity Theft: Persistent and Menacing

Dionne Gordon

July 19, 2016

Tax Identity theft has become such a large problem, the IRS convened a Security Summit that addressed only one subject: how to stop Tax ID Fraud.  This crime has cost $5.8 billion in taxpayer dollars. 

Tax identity theft happens when someone files a fake tax return using your personal information — like your Social Security number — to get a tax refund. Tax identity theft also happens when someone uses your Social Security number to get a job. You find out about it when you file your accurate return or get a letter from the IRS saying:

  • more than one tax return was filed in your name, or
  • IRS records show wages from an employer you don’t know

Most often, you’ll find out about the theft when your tax return gets rejected when your tax professional e-files on your behalf.  If your SSN is compromised and you are the victim of tax-related identity theft, take these additional steps:

  • Respond immediately to any IRS notice; call the number provided or, if instructed, go to 
  • Consult a tax professional if you don’t understand anything on the notice.
  • Have your tax professional complete IRS Form 14039, Identity Theft Affidavit, if your e-filed return rejects because of a duplicate filing or you are instructed to do so.

Continue to pay your taxes and file your tax return, even if you must do so by paper.  This is very important, Tax ID Theft doesn’t absolve you of your tax responsibility and doesn’t excuse a late filing.
This year the IRS has taken massive action to address the continued fraud.  20 new pieces of data will now be used to validate tax returns. This should help validate the authenticity of taxpayers and tax returns filed in their names. IRS Commissioner John Koskinen says the added security measures shouldn't be a sea change for filers. However, the new process is likely to slow the IRS' processing of returns, and that could mean delays in issuing refunds.

Remember, 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.  They also rarely make a direct telephone calls to taxpayers without months of written correspondence prior.

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