There are two common ways you may discover you are a victim of the ever-growing identity theft epidemic. When your tax preparer goes to e-file your tax return, it may get rejected with an error message saying another return has already been filed under your SSN, or you receive a notice from the IRS saying you have wages or 1099 income you never reported on your return. If the latter is true, someone is using your SSN to work. The W-2 or 1099 for the person is getting reported to the IRS by the employer and the IRS is unable to match it to what is reported on your return. If your e-filed return is rejected with the above-mentioned error code, someone has most likely filed a fraudulent return using your name and SSN.
(Also read: IRS Scams — Do Not Accept Phone Calls or Emails!)
The Identity Theft Epidemic
The IRS received 641,052 taxpayers affected by identity theft in 2011, which is up from 270,518 in 2010. It is a growing epidemic and although the IRS is working hard at prevention, assistance, and investigation their system and workers are overloaded with identity theft claims. IRS policy is to respond within 90 days but it is currently taking them up to a year, according to Nina Olson, Director of the Taxpayer Advocate Service (Nov 2012). If a refund is anticipated, it will be held by the IRS until they have time to address your case.
What to do next if your identity has been stolen
If a taxpayer’s return is rejected, first and foremost double-check that none of the numbers within the SSN for the taxpayer, spouse or children have been typed in wrong or transposed. If the numbers are correct and you believe you are a victim of identity theft please do the following immediately:
- Contact the Identity Protection Specialized Unit at 1-800-908-4490. This is the central point of contact for taxpayers who are reporting their identity as stolen.
- Complete and Return to the IRS Form 14039 – Identity Theft Affidavit: http://www.irs.gov/pub/irs-pdf/f14039.pdf
- Place a fraud alert on your credit reports, and review your credit reports. See contact info at the bottom of the article.
- File a complaint with the Federal Trade Commission
The Identity Protection Personal Identification Number (IP PIN) Process
The IP PIN is a six-digit number assigned to a certain group of taxpayers who:
- Were identified as identity theft victims
- Submitted required documentation
- Had their account issue resolved
Not all taxpayers who have identity theft indicators received IP PINs for the 2011 tax year as this was a pilot program. In 2012 there will be a further increase in IP PINs issued.
- The IRS will place identity theft indicators on taxpayer accounts to track and manage identity theft incidents
- The IRS will use filers to analyze returns filed on identity theft victims accounts to ensure legitimate returns are accepted and false returns are rejected
- The IRS will identify and investigate refund fraud.
- The IRS will issue the victim an Identity Protection Personal Identification Number (IP PIN)
By placing the IP PIN on all future taxpayer returns, it allows the legitimate return to bypass identity theft filters, prevents the processing of fraudulent returns, and allows taxpayers to avoid delays in their Federal tax return processing.
The IP PIN is specific to the tax year, so you will need a new IP PIN issued every year. The IP PIN should not be confused with the electronic signature “self-select” PIN.
The taxpayer must forward the IP PIN to their tax preparer each year. The IP PIN must be reported on the tax return next to the spouses occupation, for e-filed returns (Note, it will not and should not print out on a paper return). If it is not inputted onto the return, the electronic return will be rejected under code 178 or 603. If the IP PIN is lost, a replacement may be requested and a return may then be re-submitted. If a taxpayer has lost their IP PIN and did not timely request a new one, a paper return must be filed and additional processing time should be allowed.
Useful Identity Theft Resources:
IRS:
http://www.irs.gov/uac/Identity-Protection
Credit Reporting Agencies:
Equifax:
www.equifax.com
1-800-525-6285
Experian:
www.experian.com
1-888-397-3742
TransUnion:
www.transunion.com
1-800-680-7289
Federal Trade Commission:
http://www.ftc.gov/bcp/edu/microsites/idtheft/
Identity Theft Hotline, toll-free: 1-877-ID-THEFT (438-4338)
References:
IRS/ Practitioners Forum. “Current Tax Administration Challenges for the IRS: The National Taxpayer Advocate’s Perspective”. By Nina E Olson. November 2, 2012.
IRS/ Practitioners Forum. “IRS Panel”. By Brian Wozniak, Cameron Wall, John Rockwood. November 2, 2012.
By: Sarah Moore, Manager
