If you think filing your taxes is difficult, dealing with the fallout of tax theft is much, much worse. If you’ve been told someone filed a false return in your name, here’s what will likely happen as you try to clean up the ensuing mess.
Tax season is a busy time for scammers and thieves. If a tax scammer gets hold of your personal information, they will file a tax return in your name and collect a large refund on your behalf. The check or direct deposit will be routed to the scammer, and you’ll be none the wiser—until you try to file your own return, and are told one has already been filed in your name. If you think filing your taxes is difficult, dealing with the fallout of this type of tax theft is much, much worse. If you’ve been told someone filed a false return in your name, here’s what will likely happen as you try to clean up the ensuing mess. We’ve also included a few helpful tips to keep you from falling victim to this type of scam.
Being Alerted to the Issue
As we already mentioned, you likely won’t discover a false return was filed in your name until the IRS tells you so. Assuming your return is filed second, your return will be rejected, and you’ll receive written notice that another one was already filed in your name. (If you did file your return first, the fraudulent one will be the one rejected, but you’ll still receive the written notice. This, of course, means that a refund was not claimed in your name, but scammers still have your personal information.)
Even if you haven’t received a written notice from the IRS about a false return filed for you, if you have any reason to suspect that you’ve become a victim of tax theft, you should still take action.
Reporting with Form 1039
To alert the IRS to your identity theft, you’ll use IRS Form 14039. One this form, you’ll report that someone has stolen your identity and filed a return using your information, the tax year affected by this, and the last legitimate return you filed before the identity theft occurred.
After completing the form, mail it in along with a copy of your Social Security card and a government ID (driver’s license, passport, military ID, etc.). If you were notified by the IRS of the tax theft, you should include a copy of that notice as well.
Confirming Your Identity
When stopping a suspicious tax filing, the IRS may also ask you to verify your identity in one of two ways: by calling the IRS directly, or through their online Identity Verification Service. If they do need you to verify your identity, the IRS will always send out a notice by mail. They will not call you to ask for identifying information. When you receive the notice, you can use the online verification service at https://idverify.irs.gov or call the number included on the notice.
To verify your identity, you’ll need to provide:
Completing Your Return
Just because your identity was stolen, doesn’t mean you don’t have to still file your tax return. You’ll need to submit a paper return after being the victim of identity theft—e-filing won’t be accepted—before the filing deadline if you want to avoid late fees and penalties. The IRS may also assign you an IP PIN (more on that in a moment) to include on your return, so they can ensure they’re receiving a legitimate tax filing this time around.
Protecting Yourself from Tax Theft
As we mentioned, the IRS will often assign IP PINs to victims of tax theft in order to ensure their identifying information is not used for a false return in the future. However, you should not wait to become a victim to get an IP PIN; they are available to all tax filers, and are the best way to protect yourself from being a victim to begin with.
We cannot stress enough the importance of utilizing the IRS’s IP PIN program. IP PIN stands for Identity Protection Personal Identification Number. You can opt in to receive an IP PIN at IRS.gov/IPPIN. After verifying your identity, you’ll receive an IP PIN for the 2022 tax season. This unique identifying number is only good for one year, and you’ll receive a new one every tax season. Once you’ve opted in, no return will be accepted without the correct IP PIN for that year. This is the absolute best way to protect yourself from tax theft this year, and every year after.
If you’d like to learn more about IP PINs, you can check out our blog about them here, or reach out to Peacock and French, CPAs, for assistance enrolling in the IP PIN program.