Taxpayers Have To Worry About Identity Theft Too

As consumers, we've had it drummed into us in recent years about the dangers of identity theft; how it can ruin your credit and cause you to spend countless hours straightening out the mess.

Less has been said about how identity theft can impact your relationship with the Internal Revenue Service (IRS), but the tax agency is now addressing the issue.

If thieves steal your identity, they can apply for credit cards and loans in your name. But you may not have thought about another threat. According to the IRS, they can – and do – file fake tax returns in your name, claiming a big refund.

Here's how it works. An identity thief uses a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund. Generally, the identity thief will use a stolen Social Security Number (SSN) to file a forged tax return and attempt to get a fraudulent refund early in the filing season, before the victim has had a chance to file their real return.

How you'll know

You may be unaware that this has happened until you file your return later in the filing season and discover that two returns have been filed using the same SSN.

Be alert to possible identity theft if you receive an IRS notice or letter that states that:

• More than one tax return for you was filed,
• You have a balance due, refund offset or have had collection actions taken against you for a year you did not file a tax return, or
• IRS records indicate you received wages from an employer unknown to you.

What to do

If you receive a notice from IRS, respond immediately. If you believe someone may have used your SSN fraudulently, you should notify IRS immediately by responding to the name and number printed on the notice or letter. You will need to fill out the IRS Identity Theft Affidavit, Form 14039.

For victims of identity theft who have previously been in contact with the IRS and have not achieved a resolution, please contact the IRS Identity Protection Specialized Unit, toll-free, at

How can you protect your tax records?

The IRS has established the IRS Identity Protection Specialized Unit to assist taxpayers who think they could be vulnerable to identity theft. You could be included in this group if you've lost a wallet or purse, found questionable activity on credit accounts or otherwise suspect you've been a victim of identity theft. You can reach this special unit by calling 1-800-908-4490.

Meanwhile, there are ways you can minimize the chance of becoming a victim. Don’t carry your Social Security card or any document with your SSN on it. Don’t give a business your SSN just because they ask. Give it only when required.

Also, check your credit report every 12 months using www.annualcreditreport.com.

Secure personal information in your home. Protect your personal computers by using firewalls, anti-spam/virus software, update security patches, and change passwords for Internet accounts.

Finally, 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.