Learning that you’re a victim of identity theft is devastating, and fighting the damage done to your credit report and financial life is incredibly time consuming. Clients tell me that they’ve spent anywhere from 20 to 100 hours trying to prove to the IRS that they’ve been victimized.
According to the IRS, you may learn you’re a victim of identity theft when you receive a notice from the agency indicating that:
- More than one tax return was filed.
- You have a balance due, refund offset, or have had collections actions taken against you for a year in which you did not file a tax return.
- IRS records indicate you received wages from an employer unknown to you.
What to do if you are a victim of identity theft
It’s always important to be proactive when dealing with the IRS. If you find out that you are a victim of identity theft, respond immediately to the name and number listed on the notice from the IRS and fill out an Identity Theft Affidavit, Form 14039 .
Next, request that the IRS issue you an Identity Protection (IP) PIN that you can use when you file your tax return. This ensures that no one else can file under your Social Security number. Ask the agency when you can expect to get your IP PIN letter, and keep following up to ensure that you get it before next filing season.
Be sure to file a police report with your local authorities so you can document to both the IRS and your creditors that you are a victim of identity theft.
You can also file a complaint with the Federal Trade Commission’s identity theft hotline (877-438-4338), and you can request a fraud alert from one of the three credit reporting agencies. This fraud alert prevents new credit accounts from being opened without your authorization.
According to a report from the Taxpayer Advocate Service, there are currently 650,000 unsolved ID theft cases at the IRS, and individual taxpayers can wait from six months to a full year to have their cases resolved. Many of those taxpayers are due refunds that cannot be paid until the IRS fully solves the case.
Make sure you routinely follow up to see what’s been done in regard to your case. If you have been in contact with the IRS but your case has not been resolved, call the IRS’s Identity Protection Specialized Unit at 800-908-4490.
Protecting yourself from identity theft
There are a number of steps you can take to help prevent identity theft. Don’t give out your Social Security number unless it’s absolutely necessary, and be sure to ask why it’s needed—even at doctors’ offices, when filling out school paperwork, or when applying for jobs. I recommend that you tell a potential employer you will be happy to provide your Social Security number when the company is ready to hire you or when you are in the final round of interviews.
Whenever you do give out your Social Security number or your children’s numbers, you may want to begin checking your credit to ensure there are no fraudulent accounts being opened in your name. Consumers are entitled to one free credit report each year from each of the three nationwide credit reporting agencies, which they can access through annualcreditreport.com.
If you want to more actively monitor your credit, or have fallen victim to identity theft, you may want to consider a credit monitoring product that alerts you to changes to your Equifax, Experian and TransUnion credit files.
Also, once or twice a year, ask the IRS for copies of your tax records in case any W-2s or 1099s are being filed under your Social Security number, unbeknownst to you. Fill out Form 4506-T to obtain a free report. Check the box for question 8 to get the most complete version, then enter the years, starting with the year your identity was stolen, under question 9.
Whether you’ve already fallen victim to identity theft or are taking steps to prevent it, it’s your elbow grease that will get things done. Be diligent and keep detailed records. Commit to your actions, and be prepared to fight for your identity.
Eva Rosenberg, EA is the publisher of TaxMama.com, where your tax questions are answered. She is the author of several books and ebooks, including Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com and tax courses you might enjoy at http://www.cpelink.com/teamtaxmama.