Tax identity theft is one of the most common forms of identity theft reported to the Federal Trade Commission (FTC). It happens when someone files a phony tax return using your personal information — like your Social Security number — to get a tax refund from the IRS. It also can happen when someone uses your Social Security number to get a job or to claim your child as a dependent on a tax return.
How do identity thieves get personal information?
Identity thieves may use various tactics to obtain your personal information, often targeting sensitive documents or exploiting online vulnerabilities. Understanding their methods can help to protect yourself from potential threats.
Stealing physical documents and mail
Identity thieves often acquire personal information by stealing physical documents and mail. This can include tax-related documents such as W-2 forms, 1099s, and other financial statements that contain personal information required for identity theft. To protect yourself, be sure to shred any documents containing personal information before disposing of them in the trash. It’s a simple step you can take to significantly reduce the risk of identity theft and ensure your sensitive information stays secure.
Tricking victims with phishing scams
Phishing scams typically involve malicious emails or messages that appear to be from legitimate sources and persuade you to provide personal information. Warning signs of phishing attempts include poor grammar, generic greetings, and urgent requests for sensitive information, which should raise red flags for potential scams.
How to prevent tax ID theft
Tax identity theft is a serious issue with various financial and legal consequences. Here are some proactive measures you can put in place to protect yourself from tax ID theft:
Secure your personal information
- Apply for an IP PIN – Everyone with an SSN or ITIN (Individual Taxpayer Identification Number) is eligible and should consider applying for an Identity Protection PIN (IP PIN) from the IRS. An IP PIN is a six-digit number that prevents someone else from filing a tax return using your SSN or ITIN.
- Shred sensitive documents – Shred copies of tax returns, drafts, or any calculation sheets that are no longer needed.
- Avoid giving out your SSN – Don’t give out your Social Security Number (SSN) or Medicare number unless absolutely necessary. Always ask why it’s needed, how it will be used, and how it will be stored.
Protect your tax filing process
- File early – Filing your tax return early minimizes identity theft risk by reducing the opportunity window for others to use your information. This establishes a record with the IRS, making it harder for someone else to file a return using your details.
- Use secure internet connections – If you file electronically, use a secure internet connection. Avoid using insecure, publicly available Wi-Fi hotspots at places like coffee shops or hotel lobby.
- Respond to all mail from IRS as soon as possible – If you receive mail from the IRS, respond promptly to address any concerns or requests.
- Use a tax filing service you trust – Choose a reputable tax filing service like TaxSlayer who implements strong security measures to protect users’ personal information. Look for reviews and recommendations to confirm the service is reliable and experienced in protecting against tax identity theft.
Recognize and avoid scams
- Impersonation emails – Be aware of how the IRS will contact you. The IRS will not contact you through email, text, or social media. Official communication will always be sent by mail.
- Monitor tax transcripts – Monitor your tax transcripts regularly for any unusual activity that could indicate identity theft.
- Report suspicious phishing emails – Report any suspicious emails or messages that claim to be from the IRS to help protect yourself and others.
My return has already been filed without my consent. What should I do?
If someone has filed a tax return using your personal information, you’ll need to fill out Form 14039 Identity Theft Affidavit for victims of tax identity theft and file a paper tax return for the current year.
Note: If you try to e-file your return after someone else has already filed in your name, your submission will be rejected. This rejection is because the IRS’s system prevents duplicate returns from being filed electronically.
After submitting your tax identity theft affidavit, the IRS will begin reviewing your tax ID issue. Here’s what happens next:
- Case assignment – Your case will be assigned to the IRS Identity Theft Victim Assistance team to research if this is an instance of tax identity theft.
- Case assessment – The IRS will evaluate your situation to determine if the identity theft impacts multiple tax years.
- Issue resolution – They will address all aspects of the fraudulent returns, identifying if anyone listed on your return is impacted. You can expect to receive a resolution letter, generally, within 120 days. However, due to increased case volumes, it may take an average of 493 days for the IRS to investigate and resolve your case.
- Processing your tax return – Your legitimate tax return will be processed, and if a refund is due, it will be released.
- Record update – The fraudulent returns will be removed from your records, and an identity theft indicator will be added to protect your account moving forward.
For more instructions and who to contact if you think you’ve been a victim of tax identity theft, read: What should I do if I am a victim of Identity Theft?
How do I know if my ID was stolen?
If you’re a victim of tax identity theft, you may not realize it until you try to file your tax return, and it is rejected by the IRS. The IRS may also send you a letter in the mail if they detect suspicious activity related to your tax return.
This could involve discrepancies, unusual deductions, or other issues that might require clarification or action on your part. Responding to such letters promptly is important to resolve any potential issues.
If you suspect your identity has been stolen, look for the following signs:
- Receiving pay stubs from an employer you’ve never worked for
- State or federal benefits canceled or reduced unexpectedly
- Receiving bills for accounts you’ve never opened
- Unfamiliar changes on your credit report, including new accounts or inquiries
- Delays in your tax refund due to a return already filed in your name
- Missing important mail, like bank statements or tax documents
- Contact from debt collectors about debts you didn’t incur
- Unusual transactions on your existing accounts
- Notices from banks about changes you didn’t authorize
How do I report identity theft to the IRS?
If you suspect your identity has been stolen, you should contact the IRS Identity Protection Specialized Unit as soon as possible by calling 800-908-4490.
You can also notify the IRS using IdentityTheft.gov, the federal government’s one-stop resource to help you report and recover from identity theft. You can report identity theft, get step-by-step advice, sample letters, and your FTC Identity Theft Affidavit. These resources address these issues related to the identity theft.
More information about tax identity theft is available from the FTC at ftc.gov/taxidtheft and the IRS at irs.gov/identitytheft.
How to recognize and report tax scams and fraud
When the IRS contacts people about unpaid taxes, they usually do it by sending you a notice via mail, not by phone. If you encounter an IRS impostor scam, report it online to the Treasury Inspector General for Tax Administration (TIGTA) or by calling 800-366-4484. You should also notify the Federal Trade Commission (FTC).
