How to Deal with Identity Tax Theft

Criminals Use Others’ Social Security Numbers for Fake Refunds

Being a victim of identity theft can put you in a very frustrating situation. Not only can someone take out loans in your name and have you pay for it, they can also file a tax return with your Social Security number and get a refund worth thousands of dollars.

If you get a letter in the mail from the IRS stating that you filed more than one tax return or someone has already filed using your personal information, that’s a strong sign you’re a victim.

Other signs are IRS letters stating that you received wages from an employer you haven’t worked for, or you have a balance due, refund offset or have collection actions against you for a year you didn’t file.

The IRS recommends responding to any of these letters immediately. If you’re an identity theft victim in a non-tax manner, like with fraudulent lines of credit, the IRS recommends you contact the agency’s Identity Protection Specialized Unit at (800) 908-4490. You’ll also need to fill out Form 14039, the IRS Identity Theft Affidavit.

Identity theft tax fraud is soaring. The IRS stopped more than 260,000 fake identity theft returns from getting processed in 2011, with scammers trying to get a total of $1.5 billion. The previous year, the IRS stopped almost 50,000 fake returns totaling nearly $250 million in refunds.

About 140 million tax returns are processed by the IRS every year, and fake returns use someone else’s Social Security number. Any crackdown on identity tax theft may take a while to kick in, as staff members need to get the right training.

IRS staffers not trained in identity theft may audit a victim’s returns instead of using them in an investigation. That’s why preventing yourself from becoming a victim is key. The IRS never sends emails to taxpayers, so if you get an email from someone at the IRS, it’s fake.

Learning that you’re a victim of identity theft can be a horrible feeling. Facing an IRS audit can also feel pretty bad.

But you don’t have to deal with the IRS on your own. Hiring a tax attorney or tax professional enables you to protect as much of your assets as possible from the IRS’s collection actions. That’s one way to help you avoid a financial identity crisis.

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