Filing one’s tax return each year can be stressful…and we’ve found an extra cause of stress this year in tax-return related identity theft. The IRS is encountering a much higher than normal volume of identity theft cases this year. In these situations, someone other than the taxpayer files an income tax return using the taxpayer’s social security number and claiming fraudulent refunds based on fictional withholding or other items that would result in a tax refund. The IRS has more than doubled the number of employees working on identity theft cases this year.
Taxpayers may encounter the following specific scenarios:
- 1) The IRS determines that a taxpayer’s return was filed by identity thieves and notifies the taxpayer by mail in a relatively short amount of time. This is always done by mail, not email or phone.
- 2) A taxpayer may attempt to e-file a completed tax return to the IRS and have it rejected. The rejection statement tells them that “a tax return has already been filed for the taxpayer.”
- 3) A third scenario involves a 3rd party notifying a taxpayer that their Social Security Number might have been comprised. You can contact the IRS Identity Theft hotline to inquire if a fraudulent tax return might have been filed or attempted.
Please use the following resources if you suspect you are a victim of identity theft:
The IRS has a specific phone number for people who may/have been a victim of identity theft, that number is 800-908-4490 and is open Monday – Friday 7:00 am to 7:00 pm PST. Click here for more information.
If you have been impacted by identity theft, please take the following steps:
- 1) Notify the IRS right away.
- 2) File IRS Form 14039 – Identity Theft Affidavit.
- a. Impacted taxpayers must paper file returns with IRS Form 14039 and a copy of their passport or other ID attached.
- b. Joint filers will have to file a separate form for each spouse.
Form 14039 may be filled out and faxed to the IRS to flag your account if you suspect your information might be compromised, even if a fraudulent return has not yet been submitted.
Filing Form 14039 generally means it will take at least 180 days to process your tax return and issue your refund. It will also likely will mean you must paper file your return in the future.
Identity thieves need only the real social security number and real name of the individual. The address, spouse, children, income and deduction items are generally phony. Separate fraudulent returns for spouses might even be filed, even though they have been filing jointly in the past.
Please don’t hesitate to contact us with any questions or concerns.
This blog post is a summary and is not intended as tax or legal advice. You should consult with your tax advisor to obtain specific advice with respect to your fact pattern. Based on the most recent “best practice” standards for tax advisors issued by the Treasury Department, commonly referred to as Circular 230, we wish to advise you that this blog post has not been prepared to be used, and cannot be used, to provide assurance that penalties which may be assessed by the IRS or other taxing authority (including specifically section 6662 understatement penalties) will not be upheld.