ACFE Public Relations Specialist
After finally buckling down and finishing your taxes, you may feel a sense of accomplishment and start thinking about how you will use your return. However, that feeling can turn into panic and confusion the minute you receive a notice from the Internal Revenue Service (IRS) that your filing has been rejected, as a return has already been filed using your social security number. You now realize that you’re a victim of tax fraud and identity theft.
Although the IRS has recently met with leaders of private sector firms, state auditors and major providers of electronic tax software in an effort to help prevent identity theft, they are fighting fraud of a formidable size. A report published in 2015 from the Government Accountability Office estimated that the IRS paid out $5.8 billion in 2013 for tax returns that were later determined to be fraudulent.
There are ways to prevent becoming a victim, such as filing your taxes as early as possible and using licensed software with strong anti-virus protection. If you are a victim, however, in spite of efforts to protect yourself, the biggest question is what to do next.
The IRS recommends that first and foremost, you immediately contact them by calling any number provided on the notice of rejection of your filing. Next, you will need to complete IRS Form 14039, Identity Theft Affidavit. They will direct you to prove your identity, which you may do over the phone or by going to IDVerify.irs.gov. To make the process as smooth as possible, Turbo Tax suggests that you have your tax return from the prior year along with supporting documents such as W-2s or 1099s on hand. Once you've filed a complaint with the IRS, they warn that it usually takes an average of 180 days for the case to be resolved, however, most taxpayers should be able to receive their refund after that period of time.
You should receive a PIN from the IRS that can then be used for future reference to your case. As tax return fraud is also identity fraud, it is a good idea to also file a complaint with the Federal Trade Commission and to contact credit reporting agencies to place a freeze on your credit reports. It’s unfortunate, but now that you’re aware that someone has your personal identifiable information, you must be extra vigilant about your credit and accounts going forward. Identity thieves may choose to sit on your information before using it, or may sell it to a multitude of buyers who can continue to try and use it for years to come.
Although the IRS, private sector firms and U.S. Congress continue to try and develop tools and practices to thwart fraudsters, tax return fraud will likely remain a reality for millions of Americans each year and should be dealt with as swiftly as possible to prevent long-term damage to credit.