The process of recovery from an incident involving identity theft can feel like it takes a long time, but in reality, banks, creditors, and financial institutions are more accustomed to handling these reports than they were in the past. Many of them now have identity theft divisions that help their customers process these claims, which helps to ease the process somewhat.
So it can feel like a case of identity theft is reopening old wounds when a victim of this crime files his or her annual tax return with the federal government. A case that was resolved in the spring of the year before can suddenly reappear, and continue to do just as much harm as it did at that time.
The IRS has seen an increase in the incidences of tax-related identity theft, which can manifest itself in a couple of ways. First, someone can use your Social Security number and other personal information to file your tax return and pocket any refunds you are owed; typically, they just beat you to the punch, so when you go to file your return, the IRS informs you that a return with this Social Security number has already been filed.
The other method of tax identity theft involves a much longer-term prospect, meaning someone used your Social Security number to gain employment. When it’s time to file your tax return, there’s a lot more income associated with your identity than you even knew about. Guess who’s going to have to count that as income now, thus lowering your refund? It might even be enough to push you over a higher threshold, costing you penalties for not withholding enough throughout the year.
If you find yourself the victim of identity theft at any point during the year, including something as common as a lost purse or wallet, inform the IRS by providing them with a copy of your government-issue identification and the police report about the incident. This will go a long way towards helping you preemptively report any situations in which someone uses your ID to earn an income, leaving you with the responsibility for paying taxes on that amount.
Luckily, times have changed. The IRS is no longer the “big bad” entity they were once believed to be. In an era of taxpayer helpfulness, almost all documentation from the IRS comes with a number to call for help, often letting you speak to an actual person within the department.
If you think someone has used your personal identifying information, you will first know that from a notification you will receive. There will be numbers to call, and that is your first line of defense. Speak to an agent and explain that your identity has been stolen and your personal information has been used by someone else. The most important thing is to clear your name, but also to file your legitimate tax return in a timely way so that you don’t end up paying penalties due to missed deadlines. The agent you speak with at the IRS will help you do both of those things, but you must act immediately.
Around tax time, though, scam artists who are banking on the public’s fears of angering the IRS will send out scam emails in an attempt to steal information from consumers. Do NOT fall for it! The IRS will never email you with an alert. They will put everything in writing so that you have documentation of any issues against you. Any emails that claim that your name or identity has been compromised, or that there’s a problem with your tax return, are not valid. Do not give out any information without verifying the source, and know that the IRS handles these things in person, not through your email inbox.
If you found this information helpful, you may want to consider taking part in the Identity Theft Resource Center's Anyone3 fundraising campaign. For more information or to donate please visit http://www.idtheftcenter.org/anyone-3.