Tax Insights

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How to report identity theft to the IRS

In the United States, approximately 33% of adults have experienced some form of identity theft, which is more than twice the global average. One of the most common forms of identity theft occurs through tax fraud. It is estimated that tax identity theft costs US taxpayers $5.2 billion annually.

To combat this growing issue, the Internal Revenue Service has created another form to make it easier for businesses, estates, trusts, and tax-exempt organizations to report identity theft. By submitting Form 14039-B, the IRS will be able to more quickly assist entities who are victims of identity theft.

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This new form is for entities whose names or Employer Identification Numbers (EIN) have been used to facilitate refund theft by submitting fraudulent tax returns or fraudulent Forms W-2.

When is it appropriate to file Form 14039-B?

  • If you receive a rejection notice for an electronically filed return because the IRS already received a return for the same period.
  • If you receive a notice about a tax return that you did not file.
  • If you receive a notice about W-2s filed with the Social Security Administration that you did not file.
  • If you receive a balance due notice from the IRS when no taxes are owed.

If you are receiving notices for a business in your name without having applied for an EIN, you should not use the same form. Instead, file Form 14039 under the Social Security Number, Individual Taxpayer Identification Number or Adoption Taxpayer Identification Number.

If your business, estate, trust or exempt organization has experienced a data breach with no tax-related impact to the entity, it is not necessary to file either of the forms previously mentioned.

Individuals whose Form 1040 return is rejected by e-File because of a duplicate SSN should file a Form 14039, Identity Theft Affidavit.

One of the best ways to minimize your risk of tax fraud is to file your taxes as early as possible. Scammers depend on the fact that many taxpayers wait until late in the tax-filing season to file. By filing your taxes earlier in the season, scammers have a smaller window of opportunity to claim a fraudulent refund in your name.

If you need assistance, contact your Henry+Horne tax professional for more information.

Christopher Cluff