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ID Theft Resources

What Is Tax-Related Identity Theft and How Can You Recover From It?

Written by Dan Rafter for NortonLifeLock

Jan. 28, 2021

It's not a great feeling: You try to file your income tax return online only to get an error message. Turns out, someone using your Social Security number fraudulently has already filed a return in your name.

Or maybe you mail your income tax return to the IRS. A few weeks later, you receive a letter from the agency saying that your return has already been filed.

This is what happens when you are the victim of tax-related identity theft.

How does tax-related identity theft happen?

Tax-related identity theft occurs when someone uses your personal information, including your Social Security number, to file a tax return in your name. The thief does this to steal your tax refund.

This is a serious situation. Not only will you have to work with the IRS to file your legitimate return, you'll also have to deal with the fact that someone out there has stolen your identity. If the thief has already filed a fake tax return in your name, they might also use your personal information to take out loans in your name, apply for credit cards using your name, or break into your online bank accounts and credit card portals.

Fortunately, you can help protect yourself against tax-related identity theft, identify this form of theft quickly, and take steps to minimize the damage should you discover that a criminal has filed taxes in your name. Here's how you can protect yourself against this form of fraud.

Recognize the signs of tax-related identity theft

There are several signs that someone might have used your personal information to file a tax return in your name.

You try to file your return online only to have the IRS reject it: The IRS will prevent you from e-filing your return if there’s already a return filed under your Social Security number. This is the surest sign that someone has stolen your identity and you are the victim of tax-related identity theft.

You receive a letter from the IRS stating that a tax return has already been filed with your Social Security number: You might prefer filing your taxes the old-fashioned way, by mail. If, after doing this, you receive a letter from the IRS stating that someone else using your Social Security number has already filed a return? It’s a safe bet that you’re the victim of identity theft. Be aware that the IRS will only contact you by mail. The agency won’t call you or send you an email regarding fraudulent tax returns. Be sure, then, to open any mail from the IRS as soon as you receive it.

The IRS notifies you that an online account has been created in your name: You can create an online account with the IRS at IRS.gov. If you receive a letter from the service stating that someone has created an account in your name and you know you're not the person who did this? That's another sign that someone is using your personal information to access the IRS under your name.

You receive a transcript in the mail that you never requested: You check your mailbox one day to see a tax transcript from the IRS. If you didn't request this transcript, that's another sign that someone might have stolen your identity.

Take these steps if you’re the victim of tax-related identity theft

If you try to e-file your tax return and it is rejected because of a duplicate filing, your first step should be to complete IRS Form 14039, Identity Theft Affidavit. This form allows you to report your suspicions to the IRS.

Fill out the form at IRS.gov, print it out and attach it to your paper tax return. Mail the form and your return to the IRS, following the instructions on the form.

You can also request a copy of the fraudulent tax return from the IRS. For more information about this, visit the IRS’ page on dealing with fraudulent returns.

You should also report this identity theft to the Federal Trade Commission and contact the three national credit bureaus — ExperianEquifax, and TransUnion — to place a fraud alert on your credit reports.

You can also visit IdentityTheft.gov. Remember, the same person who used your personal information to file a tax return in your name still has that information. This person might use your personal information to access your online credit card portal and your online bank accounts. Be sure, then, to check these accounts daily. You may also want to update your passwords and security questions on these accounts. If you see suspicious activity, contact your credit card provider and bank immediately.

Get an IP PIN to help reduce tax-related identity theft

Starting in 2021, the IRS is offering taxpayers another tool to combat tax-related identity theft, an Identity Protection Personal Identification Number. Better known as an IP PIN, this is a unique six-digit number assigned directly to you. When you file an income tax return with an IP PIN, you are giving the IRS another way to verify your identity.

You'll also make it more difficult for scammers to file a fraudulent return in your name. That's because identity thieves would need to know not just your name, address, and Social Security number, but also your unique IP PIN.

You can use the IRS’ online Get an IPN tool to register for your IP PIN. To do this, though, you’ll first have to register an online account with IRS.gov.

To register, you'll need to provide your email address, Social Security Number or Individual Tax Identification Number, tax filing status, mailing address, and one financial account number linked to your name.

This financial account number can be the last eight digits of your credit card, as long as it's not an American Express, debit, or corporate credit card; the account number listed on your student loan statement; the account number on your mortgage or home equity loan; the account number of your Home Equity Line of Credit; or the account number of your auto loan.

You will also need to provide a mobile phone number so that the IRS can send you an activation code. If you can't provide this, you will have to wait until the IRS sends you an activation code by mail.

Victim of identity theft? Here’s how IP PINs work

The IRS already sends IP PINs to people who have suffered tax-related identity theft. According to the service, if you are a confirmed victim of identity theft, the IRS will mail you a CP01A Notice with a new IP PIN each year. This process will be automatic.

Otherwise, your IP PIN remains valid for one calendar year. This means you'll need to obtain a new one each year if you want to remain in the program. Just be aware that you might have to wait to register for your IP PIN depending on the time of year: The IRS says that its Get an IP PIN online tool is usually unavailable from the middle of November through the middle of January each year.

If you can't register for an IP PIN online, you might be able to get this number through the U.S. mail. If your annual income is $72,000 or less, you can file IRS Form 15227 to apply for an Identity Protection Personal Identification Number. To do this, you'll need a Social Security number or Individual Taxpayer Identification Number, an adjusted gross income of $72,000 or less and access to a telephone.

You can also make an appointment for an in-person meeting at your nearest Taxpayer Assistance Center, though the opportunity to do this might be limited because of the COVID-19 pandemic. Bring to your meeting one picture identification document and another identification document to prove your identity. The IRS will, after verifying your identity, send you your IP PIN through the mail within three weeks.

Don’t expect identity theft to slow down anytime soon

All forms of identity theft are a hassle. If you’re the victim of this crime, you’ll need to cancel and replace your credit cards, monitor your bank accounts and review your credit reports to make sure no one has taken out loans or opened credit card accounts in your name. And the criminals who perpetrate these crimes are showing no signs of slowing their activity.

That’s why it’s so important to remain vigilant. If you can’t file your tax return online, or you receive a letter from the IRS stating that someone has already filed a return in your name, don’t delay. Contact the IRS, your bank, your credit card companies and the three national credit bureaus of Equifax, Experian and TransUnion immediately. The faster you take action, the sooner you can begin to recover from identity theft.

Would you know if your Social Security number was being used?

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Editorial note: Our articles provide educational information for you. Norton LifeLock offerings may not cover or protect against every type of crime, fraud, or threat we write about. Our goal is to increase awareness about cyber safety. Please review complete Terms during enrollment or setup. Remember that no one can prevent all identity theft or cybercrime, and that LifeLock does not monitor all transactions at all businesses.

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