Assisting Victims of Tax-Related Identity Theft

Anyone – regardless of whether they are required to file a tax return or not or whether they are a minor, an adult or even deceased can be impacted by identity theft. According to the Federal Trade Commission, 2014 marked the fifth consecutive year that tax-related identity theft was the number one identity theft complaint filed by consumers.

Tax identity theft typically happens when someone uses a person’s stolen identifying information to file a fraudulent tax return and obtain a refund. Practitioners should be alert for signs that identity theft has occurred. Telltale signs for individuals often include a return being rejected because the client’s SSN already has been used or a client receiving an IRidentity theft notice or letter, such as Notice CPOlB or Letter 5071C, requesting your client to verify their identity.

Chapter 12 of the IRS Response Library has everything practitioners need to assist their clients who are victims of tax identity theft. Here are some immediate steps that can be taken to assist clients.

  1. Obtain proper authorization from the client via a signed power of attorney (Form 2848).
  2. Report the identity theft to the local police department and the FTC at or 877.438.4338.
  3. Contact the major credit bureaus to place a “fraud alert’ on the account at: or 800.525.6285, or 888.397.3742 or or 800.680.7289.
  4. Report the identity theft to the IRS by contacting the Identity Protection Specialized Unit at 800.908.4490.
  5. Contact the Social Security Administration at or 800.772.1213.
  6. Respond to any IRS notices and submit a completed Form 14039 (Identity Theft Affidavit). This form allows the IRS to put an identity theft indicator on the client’s tax account.

A client whose return is rejected because someone else already filed under that SSN will have to file a paper return for the current year with the Form 14039 and Form 8948 (Preparer Explanation for Not Filing Electronically) attached.

Unfortunately, identity theft issues can take many months to correct. In an audit report dated March 20, 2015, the Treasury Inspector General for Tax IRS Identity TheftAdministration (TIGTA) indicated that the timeline the IRS provides to identity theft victims for processing and resolving the case can be misleading. The IRS tells taxpayers their identity theft case will be resolved within 180 days; however, TIGTA found that on average the IRS took 278 days to resolve identity theft cases.