The most common form of tax-related identity theft occurs when fraudsters use a person’s stolen Social Security number to file a tax return and claim a fraudulent refund. Fraudsters obtain the names and Social Security numbers often with the help of corrupt insiders with access to this personal data, including tax preparers, health care billing clerks, state employees and debt collectors. The fraudsters file the phony returns by themselves electronically or even with the help of crooked tax preparers. Often, the taxpayer will discover that he or she is a victim of tax fraud when an IRS notice is received stating that more than one tax return was filed with the taxpayer’s Social Security number, additional tax is owed, or that the already-filed tax return reports wages from an employer who did not file a W-2 for the taxpayer.
In the event of a tax-related identity theft scam, the IRS urges taxpayers to immediately do the following:
(1) File an FTC complaint; (2) File a police report; (3) File the IRS Identity Theft Affidavit Form 14039; (4) Follow state-related procedures to report identity theft; (5) Contact one of the three credit reporting bureaus to place a fraud alert on the taxpayer’s account; (6) Close any financial accounts opened without the taxpayer’s permission; and (7) Respond to all IRS notices and continue to file the correct tax return.
The IRS also urges taxpayers to respond promptly to any IRS correspondence in order to facilitate resolving the situation. However, a typical tax-related identity theft scam may take roughly 180 days to resolve. If questions arise during the process, the IRS recommends calling its Identity Protection Specialized Unit at 1-800-908-4490 to assist.
Once identity theft is reported to the IRS, it will assign a unique six-digit number – an Identity Protection PIN (IP PIN) – to the victim each year in December by U.S. mail. The victim may create an account and user profile at https://www.irs.gov/Individuals/Get-An-Identity-Protection-PIN to monitor his or her IP PIN. The IP PIN is required for a victim to file all future tax returns to prove that he or she is the rightful filer of the return. If the IP PIN is ever lost, the victim can log on to his or her IRS account or can call the Identity Protection Specialized Unit. The IP PIN is not required or valid on state tax returns.
For a final note of caution, the IRS never contacts taxpayers by email or social media, and it asks taxpayers to forward any fraudulent communication purporting to be from the IRS to email@example.com. The IRS warns also that an unexpected phone call from someone claiming to be an IRS agent, either threatening a taxpayer with arrest or deportation if he or she fails to pay immediately, is a scam. Another scam variation includes the caller requesting a taxpayer’s financial information in order to send a refund. The IRS requests that any information regarding these telephone scams be reported at 1-800-366-4484 or at
https://www.treasury.gov/tigta/contact_report_scam.shtml” target=”_blank”>https://www.treasury.gov/tigta/contact_report_scam.shtml”>https://www.treasury.gov/tigta/contact_report_scam.shtml so that the Treasury Inspector General for Tax Administration (TIGTA) is able to investigate these impersonation scams.