How Can Tax Identity Theft Occur

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Protect And Monitor Your Identity

How to protect yourself from identity theft during tax season

In addition to tax ID theft, there are other types of tax-related fraud you should have on your radar. For example, if someone uses your SSN to get a job and their employer reports the income to the IRS, you could receive a notice from the IRS when that income isn’t included in your tax filing. Fraudsters may also impersonate an IRS agent, and then either demand payment from you or ask for your personal information.

Thankfully, there are steps you can take to help protect yourself from fraud and make recovery easier if it does happen. Beginning in 2021, the IRS allows anyone to request an Identity Protection PIN . After applying online and passing a rigorous verification process, the IRS will mail you your IP PIN for the year.

You can then add your IP PIN to your electronic or paper tax return. The IRS will automatically reject tax returns that have your information, but don’t have the correct IP PIN.

Identity theft could impact more than your taxes as well. You could lock or freeze your credit reports to help keep identity thieves from using your personal information to open new credit accounts. Identity theft protection programs, including Experian IdentityWorksSM Plus, can alert you if your information is compromised and help you quickly respond.

Id Theft: Heres What To Look For And What To Do When It Happens

IRS Tax Tip 2019-40, April 11, 2019

Tax-related identity theft occurs when a thief uses someones stolen Social Security number to file a tax return and claim a fraudulent refund. The victim may be unaware that this has happened until they e-file their return. Even before the victim files their return, the IRS may send the taxpayer a letter saying the agency identified a suspicious return using the stolen SSN.

Here are some things people should know about identity theft, including warning signs and steps to take after identity theft occurs.

File Your Taxes On Time

The longer you wait to file your taxes, the more time a criminal has to create schemes with your information. Fraudsters know how busy tax season can get, and they are ready to strike unsuspecting victims.

If someone manages to steal your Social Security number, youâll be playing into their hands with a delayed tax return. While you wait, they have time to file their false return with your data, swooping in to claim your money and leaving you to face the music.

The FTC received 2.8 million fraud reports from consumers in 2021 â with fraud losses increasing by 70% compared to the previous year. There is no denying that tax identity theft is on the rise, so the less time your information is exposed, the better. Once you receive all the necessary tax documents, send in your tax return.

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Irs Fraud Alert: How Can Tax Identity Theft Occur

Although you endeavor to secure your personally identifiable information , you cant shake the feeling that an identity thief is targeting you.

Maybe your last tax return got rejected, or perhaps you found an inexplicable error on your paperwork. Either way, you fear for your privacy.

Tax identity theft can happen to anyone. It only seems like an isolated case until you actually experience it, which explains why many taxpayers fail to prepare for these attacks.

The worst identity theft stories always involve unsuspecting victims. In most cases, they dont even realize theyve been attacked until the Internal Revenue Service calls them for supposedly filing multiple tax returns or misdeclaring assets.

Fortunately, you dont have to combat tax fraud alone. Our team researched official IRS resources, news reports, and verified stories from real victims to gain first-hand insights into tax identity theft.

Well explain exactly how tax identity theft occurs. And by the end of this piece, youll know the most effective ways to bolster your security and minimize the risk of tax fraud.

Please read without skipping. Well tell you why identity theft victims are always taken aback by Social Security Administration guidelines otherwise, youll end up disappointed if you have any misconceptions.

How can tax identity theft occur? Lets find out!

Irs Identity Theft: What To Do If Someone Files Taxes Using Your Ssn

You might not realize that tax identity theft has occurred until you ...

Tax-related identity theft occurs when someone else files a tax return using your Social Security Number . The IRS may flag the return if it looks suspicious. Other times, the IRS may reject your return when you attempt to e-file because they have already accepted a return that contained your SSN.

You may receive a letter from the IRS if a suspicious return is filed using your SSN. If the IRS has rejected your return due to Identity theft, you can also file a paper tax return by mail and attach Form 14039.

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Ensure Your Tax Return Filing Is Error

The IRS wonât issue tax refunds for incomplete or inaccurate returns. Theyâll contact you by mail if they need more information to process your return or need corrections before a final review.

How to reduce errors when filing your tax return:

  • Verify and use the correct SSNs
  • Match names to those listed on SSNs
  • Choose the right filing status with the Interactive Tax Assistant
  • Rely only tax preparation software for all calculations
  • Identify eligible tax credits and deductions along with the required IRS forms
  • Enter correct routing and bank account information for direct deposit refunds
  • Choose electronic filing so you may sign digitally before you hit submit
  • Renew your individual tax identification number on time

â Pro Tip: Use The IRSinteractive tool for all tax-related FAQs.

Other errors that may cause prolonged processing times include incorrect Recovery Rebate Credits or miscalculating your home office deduction.

â Related:What You Need to Know About Taxes for Your E-Commerce Business

What To Do If Someone Claimed Me On Their Taxes Without My Permission

You should call the IRS at 1-800-829-1040 to report the error and ask them how to proceed. This number is available 24/7 and will help you proceed in handling the error. In addition, you may want to print and mail your return because it generally takes 15 days for the IRS to update their records.

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Claim Your My Social Security Profile

my Social Security, via the SSA website, is a secure online portal to manage your Social Security benefits. You can use your my Social Security profile to check and protect your Social Security benefits against fraudsters in real time.

Hereâs how:

  • Go to the my Social Security portal, follow the instructions, and register your account.
  • Log in to your secure profile, and check for changes to your SSA benefits.
  • Report any suspicious activity to the SSA online, or by calling 1-800-772-1213.

Is Loss Of Property Due To Tax Id Theft Tax

“Tax Identity Theft” Warning

According to LIFARS, loss of property due to ID theft may be tax-deductible. According to the IRS, a theft is the taking and removing of money or property with the intent to deprive the owner of it. The taking of property must be illegal under the law of the state where it occurred and it must have been done with criminal intent.

Its important to note this tax rule is specific to losses only. If the financial institution does not hold you responsible for the loan taken out in your name or your home owners insurance pays for your losses, you cannot claim it as a loss.

Generally most financial institutions will not hold victims of ID theft responsible for fraudulent crimes. This is part of the Fair and Accurate Credit Transactions Act.

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Expect Longer Processing Times For Additional Exemptions

Certain forms and tax credits take longer to process. For example, if you filed Form 8379, your return could take up to 14 weeks to process.

Similarly, if you claimed the EITC or ACTC, youâll need to wait until after February 15 to receive a tax refund.

If you find yourself in any of these situations, hang tight. Your tax refund might still be on its way.

But the same may not be true if youâre a victim of tax-related identity theft.

You may or may not get a written notice explaining the situation from the IRS. So itâs up to you to take action immediately to remedy the situation.

How To Report Tax Id Theft

Its important to take action if you receive a 5071C letter from the IRS. You can also take these steps if you become the victim of a tax ID theft or if you receive a letter from the IRS about a problem.

  • Respond immediately to any IRS notice by calling the number provided on the letter. If instructed, go to the IRS Identity Verification Service.
  • Complete IRS Form 14039, Identity Theft Affidavit. Print it, then mail or fax it according to instructions.
  • Continue to pay your taxes and file your tax return, even if you must do so by paper.
  • If you are a victim of state tax ID theft, contact your state’s taxation department or comptroller’s office about the next steps you need to take.
  • If youve already contacted the IRS, but still need more tax ID theft assistance, you can call .

    You should also take these steps to report the scam and protect your bank accounts:

  • File a report with the Federal Trade Commission at IdentityTheft.gov. You can also call the FTC Identity Theft Hotline at or TTY .
  • Contact one of the three major credit bureaus to place a fraud alert on your credit records:
  • Contact your financial institutions to close any accounts opened without your permission or that show unusual activity.
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    Tax Transcript Email Scam

    Scammers claiming to be from IRS Online are sending fraudulent email messages about tax transcripts. A transcript is a summary of your tax return. You may need a tax transcript to apply for a loan or for government assistance.

    To avoid tax transcript scams, learn the real way to get a tax transcript from the IRS.

    Other Steps To Take After Your Identity Is Stolen

    Tax season is underway and this is the season for tax return fraud ...

    If someone stole your identity, you should take these additional steps to protect yourself:

  • Contact the Federal Trade Commission and file a complaint.
  • Have one of the major credit bureaus place a fraud alert on your credit reports.
  • Contact your state tax authority to see if you have any issues to clear up.
  • Close any accounts created without your permission any have any improper charges removed from your accounts.
  • If you receive any IRS notices, respond promptly to make sure you resolve any problems early on. Connect with a licensed tax professional that has experience resolving tax-related identity theft cases by going here or by starting your search below.

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    How Can I Check If My Ssn Is Being Used

    To see if your Social Security number is being used by someone else for employment purposes, review your Social Security Statement at www.socialsecurity.gov/myaccount to look for suspicious activity. Finally, youll want to use additional scrutiny by regularly checking your bank and credit card accounts online.

    How Does Tax Identity Theft Occur

    Tax time is always an exciting time of year. It can be exciting in a good way, such as looking forward to your tax return. It can also be exciting in a scary way, if youre concerned about filing your taxes properly or if you may be audited. What if you got everything ready, tried to file, and were told that a return has already been filed under your name? This is more common than you might think. How does tax identity theft occur? We will answer this question, give you some tips to help prevent it and let you know what to do if it happens.

    What Is Tax Identity Theft?

    During tax season, tax identity theft is one of the most common forms of identity theft. Tax identity theft is when a criminal steals your information and uses it to file a fraudulent tax return. This is done so that the thief can claim the victims tax return for themselves. The fraudulent refund can be obtained via mail or direct deposit.

    Tax ID theft is scary because it is difficult to detect. In most cases, you wont know youre a victim until you try and file your legitimate return.

    How To Prevent Tax Identity Theft

    Unfortunately, there is no way to completely prevent any form of identity theft. However, there are ways to reduce the risk of it happening.

    What To Do If You Are A Victim

    If you suspect you are a victim of tax identity theft, here are some steps to follow:

    • Place a fraud alert on your credit file with one of the three major credit bureaus:
    • Experian 888-397-7289, experian.com

    Also Check: Live In One State Work In Another Taxes

    Use The Wheres My Refund Status Checker On Irsgov

    You can check the status of your tax refund 24 hours after the IRS receives your e-filed return or about four weeks after mailing your paper return. Just head over to the Get Refund Statusportal on the IRS.gov website.

    To find the status of your refund and verify your identity, youâll be asked to provide personal information such as your Social Security Number. Itâs advisable to not do this on a shared device or public Wi-Fi.

    From there, youâll see which of the three processing stages your refund is currently in: Received, Adjusted, or Completed.

    Received or Adjusted means youâll need to wait a bit longer for your refund â the IRS may not be done reviewing or processing it yet. Since the status checker is usually updated no more than once a day, a daily refresh can pull up the latest information.

    Now, if you see a Completed status, check to see how your refund is being delivered.

    • Paper checks should arrive within six weeks of your return being accepted.
    • Direct deposit refunds generally hit your account within 21 days of the IRS accepting your return.

    The IRS website instructs taxpayers to wait up to five days after these windows before claiming a lost or stolen tax refund.

    Donât want to fill in your personal information online? You can also complete this process on the IRS2Go mobile app or contact an IRS representative by phone at 800-829-1954.

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    Scams That Attempt To Obtain Your Information

    2 steps to protect yourself from identity theft during tax filing season

    Thieves have begun contacting victims directly in an attempt to obtain their Social Security number or tax identification number. They often do this via phone or email. Sometimes posing as a federal or local government employee claiming that there is a problem with their tax return. Please keep in mind that the IRS will never call or email an individual and ask them to supply personal information. All outbound communications are initially made through the U.S. mail.

    can include thieves posing as loan officers or credit card company employees who offer you a good deal on a personal loan or credit card. Unless you have initiated the call to a verified phone number, never give out your personal information over the phone.

    Security breaches at credit card companies, businesses and financial institutions can occur. If this happens your personal information may become compromised. As with many instances of identity theft, you may not become aware that your information has been stolen until it is too late and someone fraudulently uses it.

    Unfortunately, there is little that you can do to prevent this type of security breach. However, if this does happen to a company you may be associated with, it is important to know what information has been compromised and how that might affect you.

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    How Can Someone Steal My Tax Refund

    Armed with little more than your name, birthdate and Social Security number, a crook can file a fraudulent tax return and collect a refund. Then, when you go to file your legitimate return, the IRS blocks you because its records show your return has already been filed.

    Do You Think Someone Stole Your Tax Refund Check

    Tax filing season is notorious for criminals that exploit the digital systems that process tax refunds. With as little as your name, Social Security number , and birthdate identity thieves can steal your tax refund check.

    If you think someone stole your tax refund check, you should immediately:

    • Verify if you have a stolen tax refund check
    • Check the status of your return
    • Identify ghost tax preparers and IRS impersonators
    • Proceed in case of a tax identity theft
    • Protect your financial information in the future

    Stolen Identity Refund Fraud perpetrators race to file false online tax returns early so they can beat legitimate taxpayers to it.

    As Eva Velasquez, president of the California-based Identity Theft Resource Center, put it:

    âItâs one of the most lucrative ways that thieves can monetize our identity credentials.”

    These scammers don’t just target vulnerable groups like the elderly or grieving families. Anyone with an SSN could potentially be a victim of tax refund fraud.

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    When Can You Request A New Ssn

    As a last resort against SSN fraud, you can apply for a new Social Security number from the SSA. However, the SSA only issues new SSNs for five specific situations:

    • You are the victim of ongoing financial or identity fraud and have proof that youâve exhausted all other avenues to resolve the problem.
    • You face threats of personal harm. For example, someone uses your SSN to track you down, harass you, and intends to cause you harm. If you can provide police reports to support these claims, you can get a new SSN.
    • You have a religious or cultural objection to any sequence of numbers in your SSN.
    • You have issues with sequential numbers assigned to the same family. Family members with similar names and SSNs can sometimes encounter problems with their tax records and legal statuses.
    • You have the same SSN as someone else. This scenario is rare, but if the SSA accidentally assigns the same SSN to multiple people, it will issue you a new, unique SSN.

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