IRS Tax Fraud and ID Theft

Last Update: May 23, 2020 Identity Theft

How Does Tax Identity Theft Fraud Occur?

In modern society, crime is part and parcel of daily trends. Many individuals and companies have lost a fortune, in cyber security crimes. Tax identity theft is a rampant activity today. It’s almost unnoticeable, yet the victims suffer a significant burden.

Here’s how it happens; a criminal uses your social security number (SSN) to file your tax returns before you, and walk away with your refund check.

Most taxpayers do not notice this and later realize while filing their tax returns due to tax filing reject by the IRS system.

Now, you may be wondering why someone would’ve got a zest to steal your information to file tax on your behalf -well, it’s of much profitability to the perpetrator. They manipulate your SSN information for personal gain, and you suffer all the cost of the crime. He can make crazy figures by filing multiple taxes.

Early Warning Signs

Some common warning signs should alert you that malicious activity is peddling around your tax returns. Well, these are three likely signs.

In this case, the IRS database can determine and flag such a filing, and when an attempt is made to perform another filing, the system may show errors with definite explanations to that effect. It indicates that you may not be able to submit your returns electronically. Isn’t it obvious that someone with criminal intentions used your SSN to file the tax on your behalf?

It is a reliable indicator that some fraudulent activity may have occurred.

  • You received payment from unfamiliar employer or source

These cases usually occur where you realize unknown payments made to your account. And these are generally in big figures in most cases. Your account may read that you got some wages payment and the tax system may indicate that, a popular activity around fraudsters.

You’ve heard of cases where a money scandal involves a chain of persons, and interestingly a number of the involved are green about how and why they received certain payments. It is yet another sign of tax fraud and should raise concern.

  • You owe additional tax or received an unexplained refund offset

An occurrence mostly when part of your refund is withheld as a result of due child support, outstanding students loans, bank loans, insurance fees, or unpaid government income tax. It’s possible that it leads to filing information mismatch that can further show that you owe the tax department some additional returns.

In this case, the IRS department may give you unexpected call to enlighten you about the issue at hand.

Significant Actions for Victims of Tax Fraud

In any moment you fall a victim of tax-related identity theft, here are some crucial steps to consider taking;

  • Contact the IRS immediately

If the IRS department has alerted you concerning any error in tax issues; consider contacting them immediately so that appropriate guidance and assistance can be offered to you straight away, so that they can take action to restore and secure your tax account and social security number accordingly. Contacting the Tax authority is one of the best ways to counter fraudulent tax filing activity.

  • Complete and submit an IRS identity theft affidavit

Whenever the IRS has recorded a fraudulent tax activity, the account holder is advised to secure and fill in the IRS form 14039, Identity theft Affidavit, which is a fallible form used to restore the account form a duplicate tax-filing occurrence. You are supposed to fill out the form, print and attach to your return and forward everything to the IRS department. It is advisable to thoroughly check the input information before sending to the relevant IRS tax community.

  • Don’t stop paying taxes

It is imperative to note that tax payments should flow as usual even when there is possible tax fraud looming. You are required by the relevant IRS authorities to continue paying your taxes as usual, but only that during this moment, you are required to do it manually; you are to make returns using paper (real and physical documents). No electronic submissions during this time until your tax account system is satisfactorily restored and secured from risks of fraudulent activities.

  • Contact the relevant FTC

In any moment you are through with the above steps, it is beneficial to begin resolving issues with the IRS, by contacting the Federal Trade Commission (FTC) Consumer Response Center at 1-877-FTC-HELP (1-877-382-4357) or via Through this, you can be able to settle pending issues related to your tax account.

  • Place a fraud alert on your credit record

As a tax compliant citizen, it is critical to contact one of the three major credit reporting companies like Equifax, Experian, TransUnion to put in place a fraud alert on your credit report. In so doing, you are helping secure your tax account from attracting fraud.

These fraudulent alert services allow you the tax account holder to monitor any activity considered to be malicious to your account and thus can help you to identify and take an appropriate step where necessary to keep you safe from threats.

Tax fraud identity theft is a real phenomenon that shouldn’t be ignored and not entertained at all cost. The essential mandate is to ensure that tax compliant citizens enjoy the full benefits of paying their dues without being exposed to uncertainties prone to catch up with tax filing.

Unfortunately, having employed all the steps mentioned above, still, there are even more dangerous tactics criminals use to steal and use your identity. The criminals are creative and innovative, thus every moment brainstorm and come up with surprisingly new tax scams to engulf innocent taxpayers.

How to Protect Your Social Security Number

  • Social security number

It’s a proper way to avoid exposing your secret social security number to any stranger who might pose you to danger. When you memorize, it means you virtually have it in mind, and none can access it physically.

It bars you from carrying around the card or jotting on a piece of paper, of which you might lose. It keeps you safe from fraudulent activities.

  • Don’t carelessly share your SSN

It is plausible to mention that several online platforms would ask you to give out your SSN, but it is advisable to research before you do that. It is safer to find out if the portal is legit. And sometimes, if you are asked to give out your social security number, use your driving license instead. You should keep this in mind to protect your privacy as well as your tax account.

  • Be smart enough to gauge phone and email scams

In many cases, taxpayers have lost in the event of falling for fake phone calls and emails concerning tax and other issues. Sometimes some cons may pose as the IRS agents and may scam you if you are not smart enough to identify. Before you give out any sensitive information regarding your social security number, first detect source reliability.

  • Consider an identity theft protection service

To keep yourself safe from fraudsters, you make rethink of putting in place the identity theft protection. These are services that ensure you as the tax account holder; you are safe from any suspicious activity. The cost of the service is relatively cheap, most being within the range of $10 to $30 per month.

With these measures in place then you may consider yourself safe from tax identity theft, and any other form of fraudulent related activities. Knowledge is power.



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