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Identity Theft and the IRS
Identity theft is what happens when someone uses another person’s personal information without their permission to commit fraud or other crimes. Usually it involves using the victim’s name, Social Security number or other personal information. It not only involves using the victim’s good name and credit rating, but can also include filing fraudulent tax returns, claiming erroneous deductions and receiving large refunds.
Identity theft cases are among the most complex cases that the IRS handles. As such, the IRS is constantly reviewing its processes and policies in order to minimize identity theft incidents as well as to help victims deal with the consequences of identity theft. Identity theft has increased to the point that the IRS created a special unit dedicated to dealing with its victims. The IRS is focused on preventing, detecting and resolving identity theft cases as soon as possible. They are also trying to balance delivering tax refunds in an acceptable timeframe while ensuring controls are in place to minimize errors and fraud.
If you receive correspondence from the IRS that states more than one return has been filed for you, IRS records indicate you received wages from an unknown employer, or you have a balance due, refund offset or collection actions for a prior year tax return, you may be the victim of identity theft. You could also receive a notice form the IRS indicating identity theft, because the IRS has put numerous steps in place to prevent, detect and stop such activity. You should respond immediately to either of these notices by contacting the name and phone number shown on the notice or letter.
What will happen with the IRS if you are the victim of identity theft? You will need to complete the IRS Identity Theft Affidavit and follow instructions on the back of the form depending on your specific situation. You will also need to provide proof of your identity with a copy of your government-issued identification (such as Social Security card, driver’s license, or passport) and a copy of a police report. A special Identity Protection Personal Identification Number will be issued to you, which will be used to designate your tax return as a valid tax return, not a possibly fraudulent return. The IRS is currently working to speed up case resolution, further train its employees in assisting identity theft victims and stepping up outreach efforts to inform taxpayers about identity theft.
There are several ways that identity thieves can access your personal information. Among these is theft of a purse or wallet, looking through your trash for personal information and accessing information you provide on an unsecured internet site. Identity thieves also use information from deceased persons.
IRS tips on avoiding identity theft include the following. The IRS does not contact taxpayers by phone, email or social media. If you receive an email claiming to be from the IRS, forward that email to the IRS at phishing@irs.gov. If you find a website that claims to be the IRS but does not begin with www.irs.gov, forward that to phishing@irs.gov also. Do not carry your Social Security card or anything with your Social Security number on it with you. Don’t give a business your Social Security number unless required to do so. Check your credit report annually. Secure your personal information. Protect personal computers with constantly updated fire walls, anti-spam/virus software, security patches and regularly changing internet passwords. Never give out your personal information over the phone, via mail or on the internet unless you initiate the contact or are sure with whom you are dealing.