Victims of tax identity theft know that dealing with the problem can be a long, stressful, and time-consuming process. How can the US Internal Revenue Service (IRS) help?
In this article, we’ll help you understand how the IRS’ tax identity theft assistance program works and what you can expect after filing your report.
We’ll also give you a few tips to follow so you can minimize the chances of tax identity theft happening to you again.
We checked official IRS sources to understand the process. We also looked into the actual experiences of people who had their tax identity stolen and gathered the best tips on how to overcome it.
The last thing you want is to miss out on crucial steps to do after identity theft and risk your information even more.
So, keep reading until the very end to learn the top tip on how to protect your information after identity theft.
What will the IRS do after you report a tax identity theft?
The first thing you should know is that the IRS takes tax identity theft seriously. Once you’ve reported the crime, the agency will take several steps to help you resolve the issue.
1. The IRS will ask you to file an Identity Theft Affidavit
If you believe that you’re a victim of tax identity theft, you should act immediately.
You must contact the IRS. They’ll ask you to file a Form 14039, which is an Identity Theft Affidavit.
This formally notifies the IRS that you’re a victim of tax identity theft, prompting them to begin the process of resolving the issue.
Additionally, you should gather any documentation that you have relating to the identity theft, such as a police report or credit report.
Once you’ve filed these, the IRS will send you a notice acknowledging your reported tax identity theft. This notice will provide instructions on what steps you need to take next to resolve the issue.
2. The IRS will assign your case to the Identity Theft Victim Assistance Organization (IDTVA)
This team of specialists will work with you to resolve the issue and help you recover any taxes that were improperly taken in your name. They’ll also take steps to protect your account from future identity theft.
As detailed on the IRS website, the IDTVA will essentially be the ones to handle the investigation of your case.
They’ll primarily validate your case and check the extent of the damage, including other possible victims related to your case and other potentially affected tax years.
The IDTVA will also be the ones to remove any fraudulent returns from your records and ensure that you receive the refund you need.
3. The IRS will add an identity theft indicator on your tax account
This indicator will alert businesses that they should take extra steps to verify your identity before issuing you credit or services.
It also alerts IRS employees that you may be a victim of identity theft and helps to prevent the issuance of fraudulent refunds.
4. The IRS will notify you once your case has been resolved
This notice will provide instructions on what to do if you have questions or need to file a return in the future. It also serves as the formal notice that the IRS now considers your case closed.
5. The IRS will provide you with an Identity Protection PIN
The IRS Identity Protection PIN (IP PIN) is a 6-digit number assigned to eligible taxpayers. It helps prevent the misuse of their Social Security number on fraudulent federal income tax returns.
If you have an IP PIN, you’ll need to enter it on your tax return to verify your identity and process your return.
How long does it take before you can get your tax refund?
Once you’ve received your PIN, you’ll need to file a paper return, as well as attach a copy of the Identity Theft Affidavit. It can take up to six weeks to receive your refund once the IRS has processed your return.
In some cases, the IRS may also require additional information from you before they issue your refund. If this is the case, it’s important to respond promptly to avoid delays.
Keep in mind that according to the IRS, the resolution of tax-related identity theft cases generally takes 120 days.
Because of the pandemic, however, there’s been an increase in such cases, and it can now take as long as 260 days for the IRS to resolve your case.
How long does it take the IRS to verify your identity?
The IRS will need to verify your identity before they can release any information to you or take any action on your behalf.
They may need to see a copy of your driver’s license, social security card, or other forms of identification. You’ll need to present these when the IRS tells you to visit an IRS Taxpayer Assistance Center in person.
Alternatively, If you’re not able to provide the required documentation in person, the IRS has a process in place for verifying your identity by mail. This can take up to 4 weeks.
Once your identity has been verified, the IRS will be able to provide you with assistance in resolving your tax-related identity theft issue.
Effects of someone stealing your identity and filing taxes
If someone has stolen your identity and filed taxes in your name, it can have several negative effects on you and your finances.
- You may be unable to file your taxes electronically
This is because the IRS will flag your SSN as being associated with a tax return that has already been filed.
As a result, you’ll need to file a paper return, which can take longer to process.
- You may have difficulty obtaining credit in the future
This is because the fraudulent tax return will show up on your credit report, and lenders will be hesitant to extend credit to you if they believe you’re already overextended.
- The IRS may garnish your wages or put a levy on your bank account to recoup any “unpaid taxes”
This can cause financial hardship and add to the stress of dealing with tax-related identity theft.
- You’ll need to deal with multiple financial problems
You may discover that someone has filed a tax return in your name and claimed a refund or that you owe taxes on the income you never received.
You may also find that collections agencies are contacting you about unpaid taxes or that your credit score has been damaged because of unpaid tax bills.
- You might deal with stress and anxiety
The process of resolving the issue can be time-consuming and frustrating. It may leave you feeling like you’ve lost control of your personal information.
Steps to take if you’re a victim of identity theft
If you’re a victim of tax-related identity theft, there are a few steps you can take to resolve the issue and protect yourself in the future.
- File a police report – This will help to document the crime and may be helpful if you need to file an insurance claim.
- Reach out to your financial institutions – This includes your banks and credit card companies. Let them know that you’ve been a victim of identity theft. They may be able to cancel any fraudulent transactions and help you protect your account going forward.
- File a complaint with the Federal Trade Commission – This will create a paper trail that can be helpful if you need to take legal action in the future.
- Place a fraud alert on your credit report – This will notify creditors that they should take extra steps to verify your identity before extending credit in your name.
- Review your credit report – This will help you to identify any accounts that have been opened in your name without your permission.
IMPORTANT: Your most important tool for combating identity theft is yourself. Make sure to be vigilant and keep yourself updated about the latest scams and methods criminals use to gain access to your personal information and steal your identity.
Small steps like shredding documents with personal information before throwing them away, not carrying your SSN card with you, and being cautious about giving out personal information online or over the phone can go a long way in protecting your data.
Reading the news and learning about criminals’ methods, as well as how you can protect yourself, especially in an increasingly technology-dependent world, will also help you minimize the chances of becoming a victim of identity theft.
Identity theft is a serious issue that can have long-lasting consequences for the victim. If you’re a victim of tax-related identity theft, it’s crucial that you contact the IRS immediately, so they can help you resolve the case and minimize further damage.
Keep in mind that there are steps you can take to resolve the issue and protect yourself in the future. At the end of the day, the most important thing you can do is to be proactive about protecting your personal information, be vigilant, and stay informed about how to protect yourself from becoming a victim of identity theft.