Id Theft: Income Tax Identity Theft

What is income tax identity theft?

There are two major types of income tax identity theft.  The first occurs when income that is not yours is reported to the Internal Revenue Service (IRS) or Georgia Department of Revenue (GDOR), and the tax agency assesses you for more taxes than you actually owe.  In this situation, you will be held accountable for another person’s taxes.  The second occurs when an imposter files for your tax refund.   In this situation, you may not receive your withholdings that were paid and exceeded the amount of taxes you actually owed.

Tax identity theft has increased in proportion to other forms of identity theft reported to the Federal Trade Commission (FTC) over the past three years.  Tax or Wage Related Fraud accounted for over 15% of all identity theft complaints in 2010, 24% in 2011, and 43% of those complaints in 2012. 

The FTC has classified tax identity theft as a type of “Government Documents or Benefits Fraud.”  This is the most common form of identity theft in Georgia and nationwide.  In Georgia, there were 12,725 Government Documents or Benefits Fraud complaints in 2012, which was 66% of all identity theft complaints.  Nationwide, Government Documents or Benefits Fraud complaints made up 46% of all reports of identity theft.

Warning Signs

  • You are shown to have filed more than one tax return
  • Someone has already filed a return using your information
  • You have a balance due, refund offset, or have had collection actions taken against you for a year you didn’t file taxes
  • You are reported to have received wages from an unknown employer.

What to do if this happens to you

For Federal Taxes:

Fill out an IRS Identity Theft Affidavit, Form 14039.

Contact the Identity Protection Specialized Unit, toll-free at 1-800-908-4490.

For Georgia Taxes:

Fill out the GDOR Fraud Referral Form.

Georgia utilizes two programs to catch tax identity theft - one is an internal system and the other is a LexisNexis system.   The LexisNexis system can flag potentially fraudulent returns by matching the information in the return against public records.  It asks the taxpayers who have filed potentially fraudulent returns to answer questions based on public information.  If the filer doesn’t take the quiz or doesn’t know the answers to the quiz, the return is determined to be fraudulent. In 2012, 4% of all returns filed in Georgia were fraudulent.  

Prevention Tips from the IRS

  1. Do not communicate electronically with the IRS.  The IRS does not initiate contact with taxpayers by email or social media tools to request personal or financial information.  The IRS does not send emails stating you are being electronically audited or that you are getting a refund.  This includes any type of electronic communication, such as text messages and social media channels.

    If you receive a scam email claiming to be from the IRS, forward it to the IRS at phishing@irs.gov.

    If you discover a website that claims to be the IRS but does not begin with 'www.irs.gov', forward that link to the IRS at phishing@irs.gov.
  2. Pay attention when an event has put you at risk.  Identity thieves access your personal information by many different means, including:
    • Stealing your wallet or purse
    • Posing as someone who needs information about you through a phone call or email
    • Looking through your trash for personal information
    • Accessing information you provide to an unsecured Internet site.
  3. Protect your Social Security number (SSN).  Show your Social Security card to your employer when you start a job or to your financial institution for tax reporting purposes.  Do not routinely carry your card or other documents that display your SSN.

    If your SSN is stolen, another individual may use it to get a job.  That person's employer may report income earned by them to the IRS using your SSN, thus making it appear you did not report all of your income on your tax return.

    When this occurs, you should contact the IRS to show the income is not yours.  After the IRS authenticates who you are, your tax record will be updated to reflect only your information.  The IRS will use this information to minimize future occurrences.
  4. Use a strong password.  While preparing your tax return for electronic filing, make sure to use a strong password to protect the data file.  Once your return has been e-filed, save the file to a CD or flash drive and then delete the personal return information from your hard drive.  Store the CD or flash drive in a safe place, such as a lock box or safe.  If working with an accountant, you should inquire about the measures they take to protect your information.
  5. Pay attention to any notices received from the IRS.  Your identity may have been stolen if a letter from the IRS indicates more than one tax return was filed for you or the letter states you received wages from an employer you don't know.  If you receive such a letter from the IRS, leading you to believe your identity has been stolen, check the IRS phishing page at IRS.gov/phishing to determine if it is a legitimate IRS notice or letter.  If it is a legitimate IRS notice or letter, reply if needed.  If the caller or party that sent the paper letter is not legitimate, contact the Treasury Inspector General for Tax Administration (TIGTA) at 1-800-366-4484.  You may also fax the notice or letter you received, plus any related or supporting information, to TIGTA at 202-927-7018.  (This is not a toll-free FAX number.)
  6. If you think you may be at risk:  If your tax records are not currently affected by identity theft, but you believe you may be at risk due to a lost wallet, questionable credit card activity, or credit report, you need to provide the IRS with proof of your identity.  You should submit a copy of your valid government-issued identification, such as a Social Security card, driver's license or passport, along with a copy of a police report and/or a completed IRS Form 14039, Identity Theft Affidavit, to the IRS by fax at 855-807-5720.  Please be sure to write clearly.

    As an option, you can also contact the IRS Identity Protection Specialized Unit, toll-free at 800-908-4490.  Their hours of operation are Monday - Friday, 7:00 a.m. - 7:00 p.m. your local time (Alaska & Hawaii follow Pacific Time).

Further Reading