Are You a Victim of Tax-Related Identity Theft?

Tax-related identity theft occurs when a fraudulent tax return is filed using a taxpayer’s stolen social security or tax identification number. Fraudulent returns are filed by the identity thief in attempt to claim the erroneously issued refunds. Such returns are filed unbeknownst to the taxpayer and are often only discovered when a taxpayer tries filing their true income tax return.

An indication that a tax-related theft has occurred is receipt of a tax return electronic filing rejection letter asserting that a previous return was filed for the year in question using either the taxpayer’s, or a dependent of the taxpayer’s, social security number.

Other situations that may alert you to tax-related identity theft include:

• Receipt of a mailed tax account transcript that you did not request.
• Getting an email from a tax preparation software company confirming that an online account was created in your name despite you not creating one.
• Receipt of an IRS notice indicating that you owe additional tax or that your refund was used to offset a balance due.
• Being assigned an Employer Identification Number (EIN) when not having previously requested or applied for it.

When the IRS identifies a fraudulent filing, it will send the taxpayer a letter requesting that they verify their identity. The verification process involves an online processing tool accessed via the IRS website or a conference call with an IRS Assistance Center.

If you believe you are a victim of tax-related identity theft but were not contacted by the IRS, you can file an Identity Theft Affidavit alerting the IRS of the purported fraud. Upon receipt, the IRS will work to verify your identity and review your account for any fraudulent activity.

After clearing any fraudulent returns from a taxpayer’s account, the victim of the tax-related identity theft will be issued a unique annual personal identification number (PIN) from the IRS. This special PIN will be required when filing their tax returns in future years.

If you’ve been the victim of tax-related identity theft or suspect a fraudulent return was filed using your social security number and need professional assistance to correct your tax account, please contact Alan Goldenberg, Principal and Leader of the Tax Controversy and State and Local Taxation groups, or your Anchin Relationship Partner.