Believe it or not there is an increasing problem of stolen-identity refund fraud with the IRS. Sound crazy? Here is a factoid that is crazy; the IRS lost $5.8 Billion to identity theft fraud in 2013. Criminals are using increasingly sophisticated strategies to steal names, social security numbers and information in order to file false tax returns with refund claims. Believe it or not Ripley’s, this could happen to you. How do I know? It happened to me four years ago. I am a CPA and have always prepared and filed my own tax return. When I tried to file my 2012 tax return before the extended due date, I was notified that my return had already been processed and a refund issued. What do you do!
First, do not panic. The IRS has taken extensive steps over the past couple of years to strengthen the security of the tax filing system, and expand its processes and avenues to assist in the resolution.
Second, realize this matter will take quite some time to resolve but it will get resolved.
If you receive a notice which leads you to believe that a return was fraudulently filed with your name and social security number, or you file a tax return and receive a notice that your return has already been processed consider the following steps which will help with the resolution process.
- Immediately contact the IRS via the telephone number on the notice or the IRS’s Identity Protection Specialized Unit at 800-908-4490 and report that a return might have been fraudulently filed.
- Once you have connected with a representative within the identity theft unit explain your situation and complete the necessary Form 14039. Begin a log of dates and times called. Ask for the representative’s direct number and name and follow up time to call back. If you are trying to get a refund which they will not give you due to the fraudulent return already being processed note that you will receive interest for the period of time you did not receive your refund if you were due one. The resolution process could take several months to a year or two to complete.
- Request a security PIN number from the IRS. You will use this number on all future payments and filings. This notifies the IRS that you were a fraud victim and allows for additional security surrounding your account.
- Follow up with your representative at least every two months.
- Protect yourself. If you believe the fraud could extend to a larger scale, contact the Federal Trade Commission Identity Theft Hotline at 877-438-4338.
- Remember, you get more with honey than vinegar. Although you feel violated and frustrated, the IRS wants to help you and will. This will get resolved.