IRS Responds to Identity Theft

Your Guide to State, Local, Federal, Estate + International Taxation

In recent years the volume of identity theft incidents has grown at an alarming rate. In 2014, more than 9.9 million Americans fell victim to identity theft. Although often less talked about, tax-related identity theft crimes have risen drastically in recent years too. In 2013 alone, more than 2.4 million taxpayers were affected by identity theft according to Treasury Inspector General for Tax Administration.

Efforts to combat the growing concerns have been underway in the last decade by the various governmental entities. For example, federal and state governments have enacted laws to levy separate and additional penalties for fraud committed using stolen identity information, which prior to the 20th century was not available. Congress has passed and amended numerous federal laws to achieve this including the Fair and Accurate Credit Transaction Act, Fair Credit Reporting Act, Identity Theft Penalty Enhancement Act, and the Identity Theft Enforcement and Restitution Act.

The Internal Revenue Service (IRS) has also joined the efforts. Most recently in August 2015, the IRS, in collaboration with tax preparers, software companies and others, issued temporary regulations to help validate taxpayer and tax return information at the time of filing by eliminating automatic deadline extensions to companies filing their employees’ Form W-2s.

Most people are familiar with signs of non-tax related theft, but may not be as familiar when it comes to tax-related identity theft or how to resolve the situation if it occurs. Some of the most commons indicators you may have become a victim of identity theft are:

  • You attempted to file an electronic return, but the IRS has rejected it because a return with your Social Security number has already been filed.
  • You receive an IRS notice indicating wages were received for a company you have never been employed with.
  • You get a letter from the IRS that a return or multiple returns have already been filed with your Social Security number and you have yet to file yours.
  • You receive a balance due notice, refund notice or collection actions for a year you filed but didn’t owe or weren’t due any money.

If you have realized you have fallen victim to tax identity thefts, please do not hesitate to contact us.

By Danette Jespersen, EA