Tax season is no one’s idea of a fun time, but it can get downright painful if you become a victim of tax-related identity theft. This happens when criminals use your personal information to file a fraudulent tax return under your name and Social Security number in order to have a refund sent to their account.
Once rampant, the Internal Revenue Service has taken successful action to detect and prevent tax identity fraud since 2015, but it still happens. Battling fraud from identity theft continues to be a major challenge for the IRS, according to a July 2020 report from the Treasury Inspector General for Tax Administration.
Here’s what you can do to help prevent thieves from stealing your identity and filing a fraudulent return.
How to Know if You’ve Been a Victim of Tax-Related Identity Theft
Most people find out they have been pawns in this scheme when they try to file their return electronically and it’s rejected because a return has already been filed under their Social Security number. You may also get a notice from the IRS asking about a suspicious tax return.
If you get a suspicious tax return notice from the IRS, it means a return filed in your name was flagged by processing filters and set aside for review. The IRS will hold your return and send you one of three letters. Depending on which notice you receive, it will instruct you to verify your identity online, by phone, or in person at an IRS Taxpayer Assistance Center. It may also ask you to confirm you submitted the return in question. In 2019, 63 percent of returns flagged for potential identity theft were verified and released, according to a report from the National Taxpayer Advocate, the arm of the IRS that represents taxpayers. Most returns are released shortly after taxpayers verify their identities, but the IRS warns that refunds could be delayed for up to nine weeks.
If someone has filed a return under your Social Security number, you can get a copy of the return by filing form 4506-F. If the fake return includes an address, don’t attempt to confront the thief.
How Thieves Get Your Data
Thieves usually get the information they need to file a tax return in your name or commit other identity crimes by infiltrating company or government websites (called data breaches) or purchasing it on anonymous websites known as the dark web. They can also trick people into divulging personal information by sending texts or emails that appear to come from your bank, employer, a government agency, company you’ve done business with, or even the IRS. Scammers have also duped human resource personnel into divulging employees’ personal and wage data.
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