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Return Fraud; What to Do if You Become a Victim

March 11, 2014

Identity theft is the most common tax fraud in the country. For the third consecutive year, it has topped the IRS Dirty Dozen Tax Scams. Every year, approximately 9 million taxpayers become victim of identity theft, Federal Trade Commission estimates. Even though it is frustrating to have one’s identity stolen, knowing what to do if it happens helps to reduce the impact of the theft and potentially catch the culprit.

Discovering the Theft

How do you know if your identity has been stolen? Most times, taxpayers discover that their identity was stolen when they receive an IRS notice informing them that more than one tax return was filed for them. In some cases of stolen identity, taxpayers may receive an IRS notice regarding wages from an unknown employer. This is because identity thieves fabricate information on a tax return to create/increase the refund amount. They use a taxpayer’s real Social Security Number (SSN), name and filing status to carry out the tax theft.

What to Do after Discovering the Theft   

If you receive information from the IRS about the filing of two tax returns or any information that you did not put on your tax return, fill out Form 14039, Identity Theft Affidavit, and send it to the IRS. If you received an IRS notice that led you to discover the theft, respond to the name and number printed on the notice. It is important that you respond as quickly as possible.

If you are unsure of the information stolen, contact your bank to alert them of the possibility of somebody accessing your account. You may also want to contact and alert the three major credit reporting bureaus. Keep monitoring your financial accounts and change your PIN for financial transactions.

Cases of identity theft are investigated by IRS identity Protection Specialized Unit. After receiving Form 14039, the IRS carries out an investigation. On an average, the IRS takes 180 days to resolve a case of identity theft, which may or may not involve catching the offender.

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