3 Ways to Respond to Identity Theft Refund Fraud

With tax season at a close, you may have received a large chunk of change from your tax return, or maybe you owed the IRS and are planning to make some adjustments for the upcoming year. In either case, you can count yourself fortunate if you were not amongst those who had their identities stolen by tax thieves who file fraudulent returns. 

I remember clearly the day that I attempted to file my return online, only to be told that I had already filed.  I called the TurboTax helpline and the representative confirmed that my return was already submitted. Highly confused, I called the Internal Revenue Service to understand what happened.  That is when I realized that I was the victim of identity theft refund fraud. 

Identity theft refund fraud is on the Government Accountability Office's (GAO) March 2019 High-Risk Series list.  According to GAO, as of December 2018, the Internal Revenue Service had not implemented 189 recommendations from GAO related to identity theft refund fraud.  According to Government Executive, the Internal Revenue Service has partnered with states and private cybersecurity professionals to reduce tax identity theft and has made progress in this area.  

Even though identity theft refund fraud is on the decline, there is still work to be done in this area. So what do you do if you try to file your return next year and find that you are a victim of identity theft tax return fraud?  

When your identity is stolen, it can feel like your life is on fire, so your best bet is to stop, drop and roll. 

  1. Stop
    First, stop and take a look at the information on your return. Verify that you have entered your social security number correctly.  If your SSN was entered correctly,  and you have received a response stating that your return was already filed, you will not be able to file your return electronically. 

  2. Drop
    If you tried to file electronically and your return was rejected due to identity theft refund fraud, you will need to drop an IRS Identity Theft Affidavit and a hard copy of your tax return in the mail.

Roll down to your local police station to file a police report detailing all of the information regarding the incident, including when and how you tried to file your return.  Also note that you filed an identity theft affidavit with the IRS, if applicable. 

I hope you did not experience the inconvenience of identity theft refund fraud like I did many years ago. 

Below are some tips to prevent identity theft in the upcoming year:

  • Do not send your social security number via an unsecured email, and opt for encrypted email.  A best practice is to email sensitive data in a password-protected document, and to provide the password in a separate communication (via the phone or a different email). 

  • Shred documents containing personal information before you dispose of them.

  • Do not post personal information online.  That birthdate that you listed on Facebook to let all your friends know that your B-day is coming? It might be just what a criminal needs to impersonate your identity.  Criminals can aggregate data from multiple online sources in order to piece together your sensitive information. 

If you are the victim of identity theft, Janaya Washington, CPA can help. Visit https://JanayaWashingtonCPA.as.me/ to schedule a consultation.