What is the IRS Doing About Identity Theft?

Identity theft is a growing concern, and there is no end in sight. Millions of individuals are affected by identity theft each year, with monetary losses reaching into the billions.

The IRS also has seen a steady increase in tax returns and tax balances that are the result of identity theft. Unscrupulous individuals will do just about anything to take advantage of the innocent, and the IRS has procedures in place to respond to thefts relating to your taxes.

ID theft and taxes

There are a few primary ways that identities get stolen and used fraudulently with tax returns.

If a Social Security Number is stolen, or "borrowed," the thief may use it to file a tax return that claims a large refund. Those who do not have to file, or who no longer file because they are only on Social Security income, are especially vulnerable.

If a loved one dies, an item of caretaking to address will be to contact the IRS and Social Security and advise of the decedent's date of death. You may be asked to mail in a copy of a death certificate. The Social Security number will then be retired, and can no longer be illegally used.

If your Social Security Number is compromised, identity theft can also occur when an individual uses the number for employment. All of the earnings are thus reported to someone else, so a good bet is that the person will claim exemptions to tax withholding, pocket the money and never file. If the owner of the Social Security Number files their own return, the income shows as unreported and thus triggers an audit on the wrong person.

For this reason, be cautious if you get a notice from the IRS stating that more than one tax return was filed under your Social Security Number, or that income was reported from an employer unfamiliar to you.

E-mails and mailings

Another popular way identity theft can occur is through phishing emails and letters that purport to be from the IRS.

The IRS does not communicate with taxpayers by email, ever. It's a security risk and prevented under their own rules for disclosure. If you ever get an email that claims to be from the IRS, do not click on any of the links contained in the email, do not respond to it, and forward it to phishing@irs.gov.

Some of the emails and letters may look very authentic, using copyrighted IRS logos and lifting screen shots from the IRS web page.

Nevertheless, the IRS does not send out general letters to taxpayers letting them know that they have unclaimed refunds or money waiting for them, and asking them to respond by providing the IRS with your Social Security Number, bank account information or any other personally identifiable information.

What the IRS will do

Fortunately, the IRS is aware of all such schemes, and has procedures in place to assist you with identity theft, even if you only suspect that it may have occurred.

Contact the IRS at 1-800-829-1040. Explain the situation and how you believe you have been affected. The IRS will ask that you provide them with a copy of your social security card, driver's license, or passport, etc, along with a copy of a police report that you may have done. You will also be asked to complete and mail in Form 14039, Identity Theft Affidavit.

The submission of these documents flags your account as to the potential for ID theft, or lets the IRS know that the tax issue at hand was due to your claim that your identity was stolen. Once the IRS has this information, they can begin a thorough research of the facts.

You may also contact the IRS Identity Protection Specialized Unit, toll-free at 1-800-908-4490 from Monday through Friday, 8:00 a.m. to 8:00 p.m. your local time for resource information and guidance.

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