Tips for Taxpayers Who are Victims of Identity Theft
A client contacted me nearly a year ago with a perplexing problem. He had received a CP2000 notice from the Internal Revenue Service, indicating that there was a discrepancy between the information he provided on his tax return and data reported to the IRS.
According to the IRS, he had made several thousand dollars driving for Uber.
There were several 1099s that showed he had worked for Uber as an independent contractor. But my client had a full-time job, and he didn’t have the time (or financial need) to drive on his off-time.
As you may have guessed, this was a case of identity theft.
Read on to find out what identity theft is, and what to do if it happens to you.
What is Tax-Related Identity Theft?
There are many scenarios that could be considered identity theft, but today we will be discussing tax-related identity theft.
Tax-related identity theft occurs when someone uses another individual’s personal information to commit tax fraud. This could mean using a person’s social security number (SSN) to file a fraudulent tax return, or to claim a tax refund or credit.
In this case, someone used my client’s SSN to create multiple driver accounts with Uber. By providing a fraudulent SSN, they hoped to collect their paychecks while passing-off their tax burden to a stranger.
This led to an investigation, and eventually a court case. We discovered that the perpetrator opened more than 8 driver accounts with Uber, all using my client’s SSN.
It took months of coordination between my office, the IRS, and Uber’s tax and legal teams to settle the matter.
Identity theft can cause ramifications that last for years. If you believe you are the victim of identity theft, you should contact an Atlanta tax attorney immediately.
How To Know If Someone Has Stolen Your Identity?
As with my client, you may not know that you are the victim of identity theft until you receive a communication from the IRS. This could be a W-2, a 1099, a CP2000, or a notification of an audit.
Here are seven signs that someone else may be using your personal information on their taxes:
- You receive a CP2000 with suspicious information that does not apply to you
- You are unable to e-file your tax return because the system has flagged you as using a “duplicate” social security number
- You get a tax transcript in the mail, but you did not request one
- You receive a notice that an online IRS account has been created in your name, or that your existing account was accessed or modified when you did not log on
- You get a notice claiming you owe additional taxes in a year where you did not file a return
- IRS records show you received payment from an employer that you did not work for
- You were assigned an Employer Identification Number (EIN) but you did not request one
If you were assigned an EIN but did not request one, that does not necessarily mean you are the victim of identity theft.
A third party may have requested one for you for a legitimate business purpose. You should contact your employer(s) and ask about this EIN before contacting the IRS.
Reporting Identity Theft
If you noticed any of the preceding signs and are certain the IRS has been given incorrect information regarding your finances, you should immediately notify the IRS.
If your attempt to e-file your return was rejected, you should file a paper return. Fill out Form 14039, the Identity Theft Affidavit, and attach it to your paper return. Mail your return to the IRS office that corresponds to your state.
If you live in Atlanta, use this page to select the address for your return.
You will be sent a letter confirming that the IRS has received your return, and your case will be assigned to the Identity Theft Victim Assistance organization.
The IDTVA will research and resolve your case. They will:
- Review your returns from previous years and determine if identity theft affected any other tax years
- Rectify any issues stemming from the fraudulent return, including determining if any other individuals were named in it
- Researching the case and authenticating all names, addresses, and SSNs that appear on each return using your name
- Processing your correct tax return and releasing your refund, if you are owed one
- Removing the fraudulent return from IRS records
- Conducting a final case analysis to ensure all outstanding issues have been rectified
- Marking your account with an identity theft indicator, which will protect you in the future if another attempt is made to use your SSN
Your case will likely be resolved within 120 days, but some cases take as long as 180 days. Once your case has been resolved, you will receive a notification from the IRS.
Some victims of tax-related identity theft will be placed in the Identity Protection PIN program. In this program, you annually receive a new 6-digit IP PIN to protect your identity.
If you have been the victim of identity theft, you should also check with your state tax agency for instructions to resolve your case.
If you live in Georgia, report suspected fraud using this form from the Georgia Department of Revenue.
How Can I Protect Myself from Identity Theft?
The best way to protect yourself from identity theft is so safeguard your personal information.
If you do your taxes online, you can log into the IRS website using your username, password, and a third piece of personal information, such as your phone number. Using all 3 will make your account more secure.
As of January 2021, all taxpayers are eligible for an Identity Protection PIN (IP PIN). The IP PIN is a 6-digit number that offers additional protections for your SSN.
Use the Get an IP PIN tool to join this program. Input your IRS.com username and password, if you already have them. If not, you will have to verify your identity using the Secure Access authentication process.
It can be helpful to think of your personal information like cash: if you leave it lying around, it isn’t secure. You can use multiple layers of digital protection to safeguard you SSN and other important data.
Keep your social security card and tax records in a secure place. If you decide to throw away any records, shred them. If you do not own a shredder, be on the lookout for a local shred day.
Back up any digital files pertaining to your taxes and keep them secure. These could be useful if your account is flagged for identity fraud and you need to prove your financial history.
Make sure your computer has updated security software to protect you from malware attacks and viruses. Some viruses can scan your computer for personal information.
Protect your financial information using encryption programs, and only enter your personal information into websites that are encrypted. You will know these sites are safe to use because they begin with “https.”
Make sure your passwords are strong and unique. If you use the same password for multiple sites, each of those accounts will be compromised if someone hacks into one of them.
Here are some tips for creating strong passwords:
- Use long phrases that you can memorize, in conjunction with letters and numbers
- When possible, do not use your email address as your user ID; create a unique username
- Opt for multi-factor authentication when it is offered
- A password manager like LastPass can help you keep track of your passwords as well as suggest secure passwords for your accounts
IRS Email Phishing Scams
Be on the alert for email phishing scams. Phishing emails will attempt to trick you into giving over passwords and other secure information. Always authenticate emails from your bank or other financial institutions.
Instead of clicking on a link from your email, go directly to your bank’s website and log into your account. If the institution needs information, the request will show in your account.
Remember that the IRS will always make first contact through the mail. If you receive an email or phone call from someone claiming to be from the IRS and you have not received a letter concerning the matter, it is likely a scam. Do not respond.
If you are the victim of a phishing scam, or if you believe you have been contacted by an IRS impersonator, report the suspicious activity to firstname.lastname@example.org.
Speak to Atlanta’s Best Tax Attorney
If you need help resolving a case of identity theft, do not hesitate to contact a tax attorney.
The Law Office of Alyssa Maloof Whatley has helped Atlantans who have been victims of tax fraud and helped them recover not only their money, but their security.
Contact our office right now at (404) 551-5838 to schedule your 30-minute.