Every year individuals look forward to a potential refund to use for that summer vacation, new car purchase or just to pay off those overdue bills. However, not everyone will be getting that refund right away. Why? Because when you filed your return, you received a notice from the Internal Revenue Service (IRS) that your filing has been rejected.
Wait…How can that be? The reason is a return has already been filed using your social security number – you are a victim of tax fraud and identity theft.
This is an experience of far too many individuals and the IRS estimates that in 2016, they issued $4.1 billion in fraudulent tax refunds to identity thieves. The IRS is looking to reduce tax fraud and has set up the Identity Theft Tax Refund Information Sharing and Analysis Center (ISAC) to help combat it. The ISAC launched in 2017 but was not fully implemented for this filing season. What should you do if you are a victim?
The following steps should immediately occur:
- If you are unable to e-file, file your return by paper to avoid potential penalties. Also, be sure to pay any taxes you may owe.
- Complete IRS Form 14039, Identity Theft Affidavit which you can get from the IRS website. You can include this with your paper tax return or follow the form’s instructions to send it separately. You may need prior year tax information to complete this form.
- When the IRS receives your Form 14039 and paper tax return and you are ultimately confirmed as a victim of ID Theft, you may be issued a separate and unique six-digit number known as an Identity Protection PIN (IP PIN). To ensure the integrity of your return, the IRS will send you a letter each year containing a new IP PIN.
The IRS states it usually takes an average of 180 days for the case to be resolved; however, if all goes as it should, most taxpayers should be able to receive their refund after that period of time.
Keep in mind that a tax return fraud is also identity fraud, so 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.
Finally, one of the best things you can do to minimize your odds of this fraud is to file your tax return as quickly as possible. In that way, if the fraudulent return is filed after you’ve already filed the real one, the fraudster’s is more likely to be rejected.
Also, keep in mind scams and what the IRS would or would not do. The IRS posted this on their website:
The IRS does not send unsolicited email, text messages or use social media to discuss your personal tax issues. If you receive a telephone call from someone claiming to be an IRS employee and demanding money, you should consult the IRS Tax Scams/Consumer Alerts webpage: http://www.irs.gov/uac/Tax-Scams-Consumer-Alerts. If you know you don’t owe taxes or have no reason to believe that you do, report the incident to the Treasury Inspector General for Tax Administration (TIGTA) at 1.800.366.4484 or at www.tigta.gov.
For those of you in New York State, here is what they recommend, per the New York State Department of Tax and Finance website:
If you are a victim or potential victim of identity theft, please send New York State the following:
- Form DTF-275, Identity Theft Declaration;
- a statement explaining why you believe you’re a victim of identity theft;
- a copy of the notice you received from our department (if you received one);
- a utility bill, lease agreement, or bank statement from the year in question to verify your address; and
- a photocopy of your government-issued ID, such as a driver’s license, US passport, or US military ID card.
You may fax or mail your documents to their identity verification unit, or call them with your concerns. Their contact information and further instructions will be with the form, which can be found on New York State’s website.
After you contact them, they will review your complaint promptly and, where appropriate, take corrective action. New York State may:
- remove any fraudulent returns from your record;
- cancel any bills you were issued as a result of the fraud;
- allow any refunds or overpayments due to you;
- put an identity theft indicator on your tax account for three years; and
- manually review any returns filed under your identification number for three years, which may cause a delay in the processing of your returns.
Good luck meeting your tax deadlines if you have not filed already.