It's happened to thousands of Americans—they try to file their annual tax return, only to get a message saying that their return has already been filed and a refund issued. Tax identity theft was responsible for more than $5 billion in fraudulent tax returns paid out in 2012. Here's what you need to know about this issue:
- It's a growing problem. According to the Internal Revenue Service's website, between 2012 and 2013, the number of identity theft criminal investigations increased by 66 percent. In 2013, the latest year for which numbers are available, the IRS initiated nearly 1,500 new investigations.
- Protect "the trifecta." There are only three things a potential thief needs to know to file a fraudulent tax return: your full name, your birth date, and your Social Security number. Keep this information safe both online and off: store important documents in a secure place like a safe, and shred them when they're no longer needed; ask schools, doctor's offices, and other organizations if you can substitute another piece of PII for your Social Security number; and keep a close eye on your mail. Check our identity theft and management FAQ for more details on keeping your personal information safe.
- The IRS will never email you. If the IRS discovers that your identity has been stolen—or if you realize it first and contact them—they will notify you in writing or, in rare instances, by phone or in person. If you get an email, text message, or social media message from someone claiming to be with the IRS, don't release any sensitive information; it's likely to be a scam. The IRS recently warned about a pervasive phone scam targeting Americans, particularly recent immigrants, across the country.
- Once discovered, it can take up to a year to resolve. According to Jerry Love, a certified public accountant in Abilene, Texas, once you discover you've been a victim, you (or your accountant) must file an Identity Theft Affidavit, known officially as Form 14039. You'll also need to provide documentation of your identity. After that, Love says, expect processing to take at least six months, but usually even longer.
Sorting out tax identity theft can be a messy and time-consuming process. As tax season approaches, follow these everyday guidelines to help protect yourself from becoming a victim.
Funded by a partnership with the Texas Legislature, and powered by the Center for Identity, IDWise is a resource center for the public on identity theft, fraud, and privacy.