IRS Audit, IRS Audit Help, IRS Audit Process

Identity Theft and Your IRS Tax Return

February 7, 2013 - IRS Audit, IRS Audit Help, IRS Audit Process

  I hope this never happens to you!   Before we began filing tax returns electronically in 1985, nobody talked much about Identity Theft. E-filed tax returns reject if the names and social security numbers on the tax return do not match the information that the Social Security Administration shares with the Internal Revenue Service.   When I first entered the e-filing workplace, in the first years of electronic tax filing, I spent a LOT of time “perfecting” my client database. A name and SSN match is applied against the primary taxpayer (first name on the tax return), applied against the spouse and each dependent claimed on that tax return.   Mismatches When a tax return is rejected for a name and SSN mismatch, I first look to make sure I entered the information correctly. Did I spell a new client’s name correctly? Did I accidentally transpose a number? If the name is a woman’s, I ask if she has married. Did she forget to notify SSA of her new last name? If the name is Hispanic, I look at the actual Social Security Card and try to see if there was a confusion between a middle name and a last name.   If everything looks good from my perspective, only then do I suspect that someone else used my client’s information. Did someone else mis-key their own social security number? Did someone need a job, dream up a SSN and did it just happen to be yours? Did someone else “borrow” your ID card for any reason?  Was your wallet or purse stolen? Did you even know that someone else was using your identity?   A Growing Problem Nina Olson, Taxpayer Advocate at the Internal Revenue Service, admits that identity theft is a growing problem every year. In 2012 she reported to Congress that ID theft has become a BIG business. Organized criminals are getting lists of information from hospitals and schools. She was surprised to learn that information about people who have died is available on the internet. Criminals are using this information to file bogus tax returns early in the filing season. When the real owner of the SSN gets around to filing their return it is rejected. This begins the battle to prove it is YOUR social security number.   If you have been a victim of identity theft, you are going to have to wait for the refund that is due you. Most taxpayers have to contact the IRS multiple times. At the end of 2012 IRS had about 650,000 ID theft cases in its inventory. The Taxpayer Advocate Service (TAS) got about 55,000 of these cases that were not already resolved by IRS. Can you believe it takes an average of 6 months to prove to the IRS that YOU really are who you say you are?   What to Do? What should you do if you are the victim of identity theft? First, file a police report. If you receive a notice from the IRS about your tax return, call the phone number on the notice.  If you have not received a notice, contact the IRS Identity Protection Special Unit IPSU) at 800-908-4490. Their hours are Mon-Fri 7am-7pm your local time. Alaska and Hawaii follow Pacific Time.   Fill out and submit IRS Form 14039, Identity Theft Affidavit. It is a simple 2-page form.   Once you are able to prove that YOU are the lawful owner of this SSN, you will be given in IP Pin (Identity Protection Personal Identification Number)  to use on your tax return. You will be given a new IP PIN to use every year. Protect it like you would protect anything else of value.   If you would like to talk to me about how you can protect yourself from Identity Theft, send an email to Nellie@bulletproofyourtaxes.com.   To your lowest legal tax, Nellie T Williams, EA