Scam Victims Protecting Yourself from IRS Taxpayer Identity Theft: A Crucial Step for Scam Victims

IRS taxpayer identity theft is a growing problem in the United States, where criminals steal personal information to file fraudulent tax returns and claim refunds in your name.

This type of identity theft can be devastating, leading to delayed tax refunds, audits, and prolonged battles with the IRS to reclaim your identity.

For scam victims, who may have already handed over sensitive personal information to criminals, the risk of becoming a victim of IRS taxpayer identity theft is even higher. Therefore, it’s crucial to understand how this scam works and take immediate action to protect yourself.

Note: this is time-sensitive information and may become obsolete over time. This was published in August 2024.

Remember

During a typical trust-based relationship scam (such as romance scams or cryptocurrency investment scams,) scam victims have given more than enough information for the criminals to take over their identity and seize control of their banking, credit cards, social security, tax, and other financial or governmental accounts

How IRS Taxpayer Identity Theft Works

IRS taxpayer identity theft occurs when someone uses your Social Security number (SSN) and other personal details to file a tax return and claim a refund in your name. Scammers typically aim to file early in the tax season before the legitimate taxpayer submits their return. By the time you file your actual return, the IRS has already processed the fraudulent one, leading to delays and complications as you try to sort out the mess.

For victims of scams, the danger is even more pronounced because scammers often gather all the information they need to commit this crime during the scam. Whether through phishing schemes, fake IRS calls, or other types of fraud, once a scammer has your SSN, date of birth, and other personal information, they can easily file a false tax return in your name.

The Risks for Scam Victims

If you’ve been scammed, it’s likely that you have already provided the necessary information for identity theft. This makes it essential to notify the IRS immediately to protect yourself. Failing to take swift action can result in severe consequences, including:

Delayed Refunds: If a fraudulent return is filed before your legitimate one, you could face significant delays in receiving your tax refund while the IRS investigates.

IRS Audits: The discrepancies caused by a fraudulent return could trigger an audit, adding stress and confusion to an already difficult situation.

Prolonged Resolution Process: Resolving cases of IRS taxpayer identity theft can take months or even years, during which time your tax records and financial life could be in turmoil.

From the IRS

IRS identity theft victim assistance: How it works

We know identity theft can be frustrating and confusing for victims. When it comes to tax-related identity theft, the Internal Revenue Service wants to resolve your case as quickly as possible. The IRS has worked hard to help victims of identity theft by making improvements and shortening the time it takes to resolve these complex situations. Each taxpayer’s experience will vary, depending on whether you tell us you may be a tax-related identity theft victim, or we tell you we have a suspicious tax return with your name on it. (Note: We often are unaware that you may be an identity theft victim until we begin processing the tax return or initiate an audit.)

Here is a general outline of what you can expect.

You tell us you may be a victim of tax-related identity theft

Here’s what happens if you learn you are a victim of tax-related identity theft. For example, your e-filed return rejects because of a duplicate tax filing with your Social Security number, and you report the incident to us:

• You should
  • File a paper tax return if you are unable to e-file
  • Complete Form 14039, Identity Theft Affidavit PDF, attach it to the back of your completed paper tax return and mail to the IRS location based upon the state you reside. If you prefer, you have the option to submit the Form 14039 online and mail your paper return separately.
• You’ll receive a letter from the IRS regarding your Form 14039
• Your case will be assigned to our ‘Identity Theft Victim Assistance’ organization where it will be researched and resolved by an employee with specialized identity theft training.
• The IDTVA organization will work to resolve your identity theft case by:
  • Assessing the scope of the issues and trying to determine if your identity theft issue affects one or more tax years.
  • Addressing all the issues related to the fraudulent return. This includes determining if there are additional victims, who may be unknown to you, listed on the fraudulent return.
  • Researching the case to verify and authenticate all the names, addresses and SSNs are accurate or fraudulent.
  • Conducting a case analysis to determine if all outstanding issues were addressed.
  • Ensuring your tax return is properly processed and if you are due a refund, releasing your refund.
  • Removing the fraudulent return from your tax records.
  • Marking your tax account with an identity theft indicator, which completes our work on your case and helps protect you in the future.
  • You will receive notification from the IRS informing you of actions taken after receipt of your Form 14039.
• You will receive notification that your case has been resolved. This is generally within 120 days, but due to extenuating circumstances caused by the pandemic our identity theft inventories have increased dramatically and on average it is taking us 640 days to resolve identity theft cases. The IRS takes identity theft seriously and is committed to resolving identity theft cases as quickly as possible and are taking steps to reduce this timeframe to 120 days or less.
• After filing Form 14039
  • You will be contacted when your case is resolved.
  • Do not submit duplicate Forms 14039 or 14039-B, nor contact the IRS about the status of your identity theft claim, this will cause delays if duplicate forms are received. You can check the Processing Status for Tax Forms dashboard to see current processing times for Form 14039 and Form 14039-B.
  • Other than responding to any requests for information promptly, there is no action you need to take until we contact you.
  • If you receive a balance due notice because a credit elect you requested was not applied because of the identity theft issue, call the number provided on your notice.

All confirmed tax-related identity theft victims will be placed into the Identity Protection PIN Program and annually be issued a new, six-digit IP PIN to prevent someone else from filing a return using you identity and must be used on all future filings.

We tell you we have a suspicious return with your name on it:

The IRS Taxpayer Protection Program willidentify a suspicious tax return bearing your name and SSN and will send you a notice or letter. The Taxpayer Protection Program proactively identifies and prevents the processing of identity theft tax returns and assists taxpayers whose identities are used to file these returns. There are many reasons why a return may appear to suspicious to us, and we take this precautionary step to help protect you. Here’s what happens in this situation:

• You may receive one of the following letters from the IRS asking you to verify your identity and tax return information. We won’t be able to process the tax return, issue refunds, or credit any overpayments to your account until we hear from you.
  • Letter 5071C, Has an option to use the online tool to verify your identity and the tax return. This is where you can tell the IRS if you did or didn’t file the return.
  • Letter 4883C, Provides a toll-free number to verify your identity and the tax return and to tell the IRS if you did or didn’t file the return.
  • Letter 5747C, Provides a toll-free number to make an appointment at a local Taxpayer Assistance Center to verify your identity and return in person. It also provides a toll-free number to tell the IRS that you didn’t file the return.

Follow the letter’s specific instructions on how to verify your identity and the tax return.

• Access the online verification tool or call the toll-free number provided in the letter.
• If you did file a return, you must have the letter with you when accessing the online verification tool or when you call the Taxpayer Protection Program or the Taxpayer Assistance Center Appointment line.
• Have a copy of a prior-year tax return, if you filed one and have it available, to help verify your identity.
• Have a copy of the Form 1040 series return, if you filed it, referenced in the letter.
• Verify your identity. If you are unable to verify your identity with the customer service representative, you may be asked to visit an IRS Taxpayer Assistance Center in person. You should plan on providing picture identification, the letter you received (while it is not required if completing an in person visit it is recommended), and a copy of the affected tax return if you did file one.
• Do not file a Form 14039.
• If you receive similar notices about suspicious returns, you do not need to complete the Form 14039.

Once you verify your identity, you can let us know if you filed the tax return in question.

If you did not file the tax return in question, we will remove it from your IRS records. Filing a paper tax return may be recommended if you have not yet filed your own tax return.

If you did file the tax return in question, we will release that tax return to continue processing, and barring any unforeseen issues (math error, missing forms, or schedules) your refund will be issued once it has finished processing.

How quickly we can work identity theft cases depends upon the volume of work and the complexity of the cases. Once we completely resolve your tax account issues, we will mark your account with an identity theft indicator to help protect your tax account in the future.

All confirmed tax-related identity theft victims will be placed into the Identity Protection PIN Program and annually be issued a new, six-digit IP PIN to prevent someone else from filing a return using their identity and it will be required to be used on all future filings.

Steps to Protect Yourself

If you suspect that your personal information has been compromised, particularly if you’ve been scammed, taking the following steps can help safeguard your identity and protect your tax refund:

Notify the IRS: Contact the IRS immediately if you believe your information has been stolen. You can do this by completing and submitting Form 14039, Identity Theft Affidavit. This form alerts the IRS to potential identity theft and helps them take measures to protect your tax account. See below for more detail on this.

Request an Identity Protection PIN (IP PIN): The IRS offers an Identity Protection PIN (IP PIN) to taxpayers who have been victims of identity theft or are at risk. This six-digit PIN is used to verify your identity when filing your tax return, preventing unauthorized returns from being filed in your name.

File Your Tax Return Early: The sooner you file your tax return, the less likely it is that a scammer can file a fraudulent return in your name. Beat them to the punch by submitting your return as soon as possible after the IRS starts accepting returns.

Monitor Your Financial Accounts: Keep a close eye on your bank and credit card accounts for any suspicious activity. If you notice any unauthorized transactions, report them to your financial institution immediately.

Check Your Credit Report: Regularly review your credit report for any signs of unauthorized activity, such as new accounts opened in your name. You can obtain a free credit report once a year from each of the three major credit bureaus through AnnualCreditReport.com.

Stay Informed and Vigilant: Be aware of phishing attempts and other scams that may try to trick you into providing additional personal information. The IRS will never initiate contact with you via email, text message, or social media to request personal or financial information.

Taking Action to Secure Your Future

The risk of IRS taxpayer identity theft is real, especially for those who have already fallen victim to scams. By taking proactive steps to notify the IRS, secure an IP PIN, and monitor your financial accounts, you can protect yourself from further harm. Remember, the sooner you act, the better your chances of safeguarding your tax refund and financial well-being. If you have already been affected, don’t hesitate to seek assistance from the IRS and take all necessary measures to reclaim your identity and protect your financial future.

Other Steps You Should Take as a Tax-Related Identity Theft Victim

• Follow Federal Trade Commission recommendations.
• Check with your state tax agency to see if there are additional steps to take at the state level.
• Make sure you use good security software and other best practices to help protect your personable identifiable information and stay safe when you “surf” or shop on the internet.
• Be alert to phishing scams intended to steal your sensitive data.
• Learn more at Taxes. Security. Together. – an awareness campaign supported by the IRS, state tax agencies and the tax industry.

Other Resources

• Identity Theft Central
• Taxpayer Guide to Identity Theft
• IRS operations: Status of mission-critical functions
• Security Summit
• Social Security Administration