How does tax identity theft occur?

Tax-related identity theft occurs when someone uses your stolen personal information to file a tax return claiming a fraudulent refund. An identity thief might use your Social Security Number to fraudulently file a tax return and claim a refund. 

It doesn’t just happen during tax season. Tax identity theft can occur any time during the year; however, February and March show notable upticks in incidences. 

All a thief needs to file a fraudulent tax return is your name, birth date, and Social Security number. They can obtain these in various ways, such as from a lost wallet or purse, lost or stolen mail, or documents containing personal information that you have discarded un-shredded. 

Thieves may also steal your identity and money in more involved ways, such as via email (“phishing”), fax, phone, or phony official letters. Thieves are getting more sophisticated, especially in the digital age, and there are always new scams to look out for. 

Some recent examples, however, include:

  • Phone scam: A phone call where the thief tells you that you owe the IRS money and threatens that a warrant will be issued for your arrest. Variations include the threat of other law-enforcement agency intervention, deportation, or revocation of licenses. Some scam artists program their computers to display IRS phone numbers on your caller ID. 
  • Email phishing scam: A bogus email that appears to be from the IRS or a program closely related to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), that attempts to trick you into revealing personal and financial information. The email includes links to fake websites that mirror the official IRS website. 
    • Tax transcript: The email carries an attachment labeled “Tax Account Transcript” or something similar, and the subject line uses some variation of the phrase “tax transcript.” The attachment may contain a computer virus or malware. 
    • IRS refunds: An email claiming to come from the IRS tells you that you are eligible to receive a tax refund for a given amount if you follow the instructions in the email. 

It can be straightforward to avoid many of the above scams by remembering one crucial piece of information:

The IRS will NEVER initiate contact with you via email or any social media platform or tool to request personal or financial information.

That means if you receive an email claiming to be from the IRS, it is not actually from the IRS and is, in fact, a phishing scam. Do not click on the links or open any attachments; immediately forward the email to, or call the Treasury Inspector General for Tax Administration at 800-366-4484. 

While it is not impossible for the IRS to be initiating contact with you by fax or phone, it is unusual. Therefore, if you receive an unexpected fax or phone call from the IRS, you should be sure to call the IRS at 800-829-1040 to verify that the fax or call is legitimate before engaging any further. If the call is real, the person on the other end will not object to you doing this. 

Additionally, keep in mind that the IRS will never, under any circumstances, call you with threats of lawsuits or arrests. If you receive a call like that, it is an identity theft scam, and you should hang up the phone.

Can identity theft affect my tax refund?

It’s possible that you could be completely unaware that you are the victim of identity theft until the IRS rejects your return for electronic filing or you get an IRS notice or letter. 

It is also possible to have your e-file rejected due to a simple mistake. Check to make sure you haven’t mistyped a number. This situation may also occur due to a dispute about claiming a dependency exemption. Such cases do not necessarily indicate identity theft. 

On the other hand, receiving a notice or letter from the IRS stating one of the below could be a cause for concern:

  • More than one return was filed in your name for the year
  • You have a balance due or refund offset. 
  • The IRS had initiated collection action for a year when you did not file a return or
  • IRS records indicate that you received wages from an employer you didn’t work for. 

The good news is that the IRS has employees dedicated exclusively to handling identity theft cases. The Identity Theft Victim Assistance (IDTVA) department will be able to review your account to make sure the IRS correctly processes your return and issues your refund (if relevant) while removing any fraudulently filed returns from your account. 

After carefully scrutinizing other tax returns filed under your taxpayer identification number and flagging your account with an indicator to help detect any possible future fraudulent returns, they will resolve all issues and close your case. 

This indicator will remain on your account indefinitely, and you may also be assigned an Identity Protection Personal Identification Number (IP PIN) to verify your identity when filing future returns. 

What to do if you are the victim of tax-related identity theft

If your Social Security number or personal information has become compromised, there are some concrete steps you can take immediately. 

First, and most importantly, notify the IRS at once. If you received a phishing email, forward it to the IRS as described above. You should respond promptly to the name and phone number provided if you received an IRS notice or letter. 

If you believe there is a risk of identity theft due to lost or stolen personal information, contact the Identity Theft Victim Assistance immediately so the agency can take action to secure your tax account. By phone, you can reach the IDTVA at 800-908-4490.

You will then need to complete a Form 14039, Identity Theft Affidavit, and provide identifying information. 

In closing, remember that there are various reasons you may find yourself at risk for tax-related identity theft. If you have lost or had stolen a wallet, purse, or documents that include sensitive identifying information, if you have noted questionable credit card activity, or you have fallen victim to an identity theft scam, you should take swift action. 

Tax-related identity theft can be scary, but it is within your power to limit the damage, contact the IRS and put things right. 

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