Avoiding Identity Theft This Tax Season

Posted on Thu, Mar 26, 2015 ©2021 Drucker & Scaccetti

As we head full steam into tax filing season, identity theft perpetrators lurk in the shadows.  They prey on taxpayers’ lack of knowledge about how the IRS usually conducts business and on their fear of its wrath. Various scams and schemes abound and educating yourself about them is the first step in preventing fraud.


In an effort to help taxpayers protect themselves, the IRS has offered two “Fact Sheets” listing numerous ways to protect yourself from identity theft and the steps you should take if you have become a victim.


Fighting identity theft is an ongoing battle as criminals continue to create new ways of stealing personal information and using it for their gain. Tax-related identity theft occurs when someone uses a stolen Social Security number (SSN) to file a tax return to claim a fraudulent refund. A taxpayer's SSN can be stolen through a data breach, a computer hack or a lost wallet. Although identity theft affects a small percentage of tax returns, it can have a major impact on victims by delaying their tax refunds.


One way the IRS is battling identify fraud is limiting the number of direct deposit refunds to a single financial account or pre-paid debit card to three. Fourth and subsequent valid refunds will convert to paper checks and be mailed to the taxpayer. The limit also will stop certain tax preparers who improperly deposit client refunds into their own accounts.


There are a number of simple, practical steps that you can take to avoid becoming a victim. These include:

  • Don't carry your Social Security card or any documents that include your SSN or Individual Taxpayer Identification Number (ITIN) on your person;
  • Don't give a business your SSN or ITIN to someone just because they ask. Give it only when absolutely required;
  • Check your credit report every 12 months;
  • Review your Social Security Administration earnings statement annually;
  • Secure personal information in your home with a fire safe;
  • Protect your personal computers by using firewalls and anti-spam/virus software, updating security patches and changing passwords regularly for internet access accounts; and
  • Don't give personal information over the phone, through the mail or on the internet unless you have initiated the contact or you are sure you know who you are dealing with.


There are several key indicators that you may have fallen victim to tax-related identity theft.  You should be on guard if you receive a notice from the IRS or learn from your tax advisor that:

  • More than one tax return was filed for you;
  • You owe additional tax, have a refund offset or have had collection actions taken against you for a year you did not file a tax return;
  • IRS records indicate you received more wages than you actually earned; or
  • Your state or federal benefits were reduced or cancelled because the agency received information reporting an income change.


If you find you have been a victim of tax-related identity theft, you should immediately:


In addition, if your SSN has been compromised and you know or suspect you may be a victim of tax-related identity theft, you should:

  • Respond immediately to any IRS notice and call the number provided;
  • Complete IRS Form 14039, Identity Theft Affidavit.
  • Continue to pay your taxes and file your tax return, even if you must do so by paper; and
  • If you previously contacted the IRS and did not have a resolution, contact the Identity Protection Specialized Unit (1-800-908-4490).


The IRS is continually reviewing processes and policies to minimize the incidence of identity theft and to help those who find themselves victimized. Among the steps underway to help victims:

  • The IRS Identity Protection PIN (IP PIN) is a unique six digit number that is assigned annually to victims of identity theft for use when filing their federal tax return that shows that a particular taxpayer is the rightful filer of the return.
  • The IRS is offering certain taxpayers the opportunity to opt into the IP PIN program. These are taxpayers who may be unaware that they are identity theft victims but the IRS identified them because their accounts have indications of identity theft.


Identity theft cases are complex to resolve, frequently touching on multiple issues and multiple tax years. A typical case can take 120 days to resolve.  Though the IRS is working to streamline its internal process and reduce that time period, patience will be required when dealing with tax identity theft.


If you think you have become a victim of tax identity theft, or if you have any questions on tax identity theft, please contact us.  We can help you alert all the necessary parties and minimize the damage caused by this crime.

Topics: tax return, Online, fraud, Identity, ID, Theft, Social Security Number, IRS

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