Identity theft has become an epidemic and the Internal Revenue Service and state revenue departments have become the prime targets of increasingly savvy cyber criminals. Armed with an individuals personal data – possibly harvested from another security breach (such as with Anthem Blue Cross and Blue Shield, General Motors, the Office of Personnel Management or even your local doctors office) these savvy criminals use the loopholes in the system to steal money from the government in your name.
If you become a victim of this crime you’ll discover just how frustrating trying to unravel the mess can be. And it can take up to 9 months to receive your legitimate tax refund! The only good news is that once the tax return filed with your stolen information is determined to be fraudulent, you are not responsible for any money stolen.
How do find out if you are a victim of tax identity theft*?
One way is when your own legitimate tax return is rejected because your name and SS number has already been used on a tax return. Another way is when you receive a letter from the IRS (letter 5701C ) asking you to verify your identity when you haven’t even filed your return yet. You might also get this letter on your own tax return if the IRS ‘filters’ determine the need to verify that your return was actually filed by you- see Understanding Your 5071C Letter
What do you do if you are a victim?
If your return is rejected, you need to fill out Form 14039 Identity Theft Affidavit and send it with proof of identity (copy of drivers licence/ passport or any valid id) along with a paper copy of your tax return in order to file your legitimate tax return. If I have prepared your tax return, I will help you through this process.
If you receive the 5071C letter, the letter will give you instructions on calling in or going online to verify your identity and let them know if the return was filed by you or not. I understand the information they ask to validate your identity can be difficult since some of the questions may be based on information from the distant past.
The IRS has other suggestions such as filing a police report, notifying credit bureaus and filing a report with the Federal Trade Commission. See Taxpayer Guide to Identity Theft
What can you do to protect your identity?
- If you have any reason to know or suspect that your identity has been compromised, such as being notified of that (Anthem Blue Cross & Blue Shield sent letters to affected individuals) or perhaps losing your wallet with your id, then you need to file form 14039(Identity Theft Affidavit) with the IRS.
- Never carry your social security card with you.
- When getting rid of documents that have your personal information, shred them. Don’t just throw them away.
- Don’t give your personal information (name, date of birth, social security number, etc) to everyone who asks for it. Never give that information to someone who calls you, no matter who they say they are. Be discerning, be careful.
What will filing Form 14039 Identity Theft Affidavit do?
When you file Form 14039 Identity Theft Affidavit with the IRS, the IRS will issue you a IPPIN (Identity Protection PIN) This IPPIN will be necessary to file your tax return. Any tax return with your name and social security number filed without the IPPIN issued to you will be rejected. This is meant to prevent any fraudulent tax return from being filed on your behalf.
Scam telephone calls and emails
Telephone calls claiming to be the IRS is another trick unscrupulous individuals are using trying to get your money. Recently new scams include giving you a ‘case number’ and sound more professional than prior calls. Don’t ever believe that the IRS or any state agency will call you demanding money or send you an email requesting your personal information (social security number, date of birth etc). If you owe the IRS money, you will get mountains of letters, including certified letters, not phone calls. And no government agency ever demands that you pay them with ‘prepaid debit cards’ as these criminals demand.
If you are concerned that you might be affected by identity theft or you’d like more information, please give me a call or email me with your questions
*In the past the most common tax identity theft was the use of your name and social security number by an individual who did not have a Social Security number in order to obtain a job. Another was claiming someone else’s dependents that they had no right to claim in order obtain a larger refund. Tax fraud has also included taking non working individuals off the street, making phony W-2’s (perhaps with actual Employer Identification numbers) filing fraudulent returns to obtain illegal refunds. While these crimes still exist, the most common is now filing a very legitimate appearing tax return using stolen id to obtain a refund – generally at least $2,000-3,000