Tax Identity Theft

What is Tax Identity Theft?

Tax identity theft happens when someone steals your personal information to commit tax fraud. They might:

1. Pretend to be you to claim a tax refund that doesn’t belong to them.
2. Use your identity to get a job, so their income gets reported under your name.

The IRS has systems to catch fraud, but they aren’t perfect, and some thieves still get through.

Types of Tax Identity Theft

1. Stolen Identity Refund Fraud (SIRF)

This happens when a thief files a fake tax return using your name and information to get a refund. When you try to file your real tax return, the IRS may reject it because they think you’ve already filed. You’ll need to:

• Report the fraud to the IRS.
• File your tax return by mail.
• Wait for the IRS to fix the problem and send you the refund you’re actually owed.

2. Employment-Related Tax Identity Theft (ETIDT)

This happens when someone uses your personal information to get a job. The income they earn is reported to the IRS under your name, which can cause problems like:

• Notices from the IRS saying you owe more taxes.
• Audits (a review of your taxes by the IRS).
• Letters saying you didn’t file a required tax return.

To fix this, you’ll need to work with the IRS and, sometimes, the employer who hired the thief.

How to Protect Yourself from Tax Identity Theft

Identity Protection PIN (IP PIN)

The IRS offers a tool called the Identity Protection PIN (IP PIN) to help keep your taxes safe. An IP PIN is a special code only you know. It’s required when filing your tax return to prove it’s really you.

Here’s how it works:

• You’ll get a new IP PIN each year from the IRS in a letter called CP01A.
• You can also find your IP PIN online using the IRS website.

Signs That Tax Identity Theft Might Be Happening

If you file your taxes electronically and get a rejection notice, it might mean someone has already filed using your information. Look for these rejection codes:

• R0000-902-01 or R0000-194: These mean your or your dependent’s Social Security Number (SSN) is incorrect or already in use.
• R0000-507-01 or R0000-544-02: These mean someone may have already claimed your dependent, or the dependent filed their own return.

If these errors keep showing up after double-checking your information, you could be a victim of tax identity theft.

What to Do if the IRS Asks You to Verify Your Tax Return

Sometimes the IRS will ask you to verify your identity if they suspect fraud. You may need to:

1. Verify Online: If you receive IRS Letter 5071C, you can use their online tool.
2. Verify by Phone or In Person: If you receive IRS Notice 4883C, you’ll need to call the IRS. If you get IRS Letter 5747C, you’ll need to visit an IRS office.

What to Do if You’re a Victim of Tax Identity Theft

If someone has already filed a tax return using your identity, follow these steps:

1. File your real tax return by mail with a Form 14039, Identity Theft Affidavit.
2. Get an IP PIN to protect yourself in the future.
3. Work with the IRS to resolve the fraud.

For help, contact the IRS’ Taxpayer Protection Program at (800) 830-5084.

What Happens in Employment-Related Tax Identity Theft?

When someone uses your identity for work, their income is reported to the IRS under your name. This can cause big problems, like audits or notices saying you didn’t report all your income. Here’s what to do:

1. File Form 14039, Identity Theft Affidavit.
2. Contact the IRS to explain the problem.
3. Work with the IRS and the employer to correct the income report.
4. If the issue becomes too complicated, reach out to the IRS Taxpayer Advocate Service for extra help.

How Long Does It Take to Fix Tax Identity Theft?

Unfortunately, resolving tax identity theft takes time:

• Cases of stolen refunds (SIRF) can take 16 weeks or longer, and some cases take over 22 months to resolve.
• Employment-related cases (ETIDT) often take more than a year to fix.

If things aren’t getting resolved, contact the IRS Taxpayer Advocate Service for assistance.

How to Stay Safe

To protect yourself from tax identity theft:

1. Get an IP PIN from the IRS. You can sign up for one online at the IRS website: Get an IP PIN.
2. File your taxes early to beat thieves to the punch.
3. Keep your personal information safe and secure.

Tax identity theft is frustrating, but taking these steps can help you protect yourself and resolve problems if they happen.