October 14, 2016 11:08 am

Identity Theft Victim? What to Do

Identity theft (ID) is rampant. Edith Ramirez, the chairwoman of the Federal Trade Commission (FTC), which is the lead federal agency combating identity theft, said earlier this year that tax refund fraud is “the largest and fastest growing ID theft category” that the agency tracks (source). In 2015, the IRS had more than 600,000 tax-related ID thefts.

Unfortunately, you may not even know you’ve been victimized until you try and file your return. Your e-filed return may be rejected, and a legitimate tax refund can be held up for months. Perhaps even worse, you may receive a tax bill from the IRS for a year in which you didn’t file a return because your income was below the filing threshold. If you know you’ve been victimized or suspect you may have been, what can you do?

1. Contact the IRS immediately

If you know your personal information has been compromised, or suspect that it has, tell the IRS. File Form 14039, Identity Theft Affidavit, to put the IRS on alert. Send the form by mail to the IRS (the form will tell you where depending on your situation), accompanied by a copy of your Social Security card, driver’s license, passport, military ID, or other government-issued form of identification.

By filing this form, the IRS marks your tax account as “suspect.” Unfortunately, this won’t necessarily speed up the issuance of your tax refund, but it may ease filings going forward.

2. Obtain a special tax identification number

If someone else is using your Social Security number to file a bogus tax return, it interferes with your filings. You can obtain an Identity Protection Personal Identification Number (IP PIN), a six-digit number, to use in place of your Social Security number on future tax returns.

There are three ways in which the IRS issues IP PINs:

  • To taxpayers who the IRS has identified as ID victims. In fact, the IRS expects to send about 2.7 million IP PINs through the mail later this year for use in the 2017 filing season.
  • To those who file Form 14039, as explained earlier.
  • To those who live in Florida, Georgia, and the District of Columbia, which are areas that are part of a pilot program on combating ID theft.

To obtain an IP PIN online, you must go through an authentication process called “Secure Access Steps.” These steps are explained in IRS Fact Sheet 2016-20 (these are the same steps used for the Get Transcript online program).

3. Learn more about ID theft from IRS resources

Combating ID theft is a priority for the IRS, and toward this end it has many resources to help you.

Conclusion

You never think that identity theft could happen to you, but it could. If this unfortunate occurrence strikes home, take action immediately. If you have not resolved the matter, contact the IRS’ Identity Protection Specialized Unit at 800-908-4490.

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Tax Glossary

Imputed interest

Interest deemed earned on seller-financed sales or low-interest loans, where the parties’ stated interest rate is below the applicable IRS federal rate.

More terms