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Eight Signs You May Have Been the Victim of Tax ID Theft

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Tax-related identity theft can be hard to spot, but it's important to address it as soon as possible once you notice the signs.

Tax ID theft occurs when someone uses a stolen Social Security number (SSN) to file a fraudulent federal tax return and get money in the form of a refund from the IRS. Unfortunately, this category of fraud is on the rise. In 2020, the Federal Trade Commission received 89,390 reports of tax-related identity theft, compared with 27,450 in 2019.

Here are some of the signs that you have been targeted for tax ID theft:

  1. You are unable to file your return online because of a duplicate SSN, which means someone has already filed a tax return using your number. If you file through the mail, you receive a written notice from the IRS stating that more than one return has been filed with your SSN.
  2. You receive a notice from the IRS regarding a tax return you did not file.
  3. You are mailed a tax transcript that you did not request.
  4. An online IRS account is created in your name by someone other than you.
  5. Your existing online IRS account has been accessed or disabled by someone else.
  6. You receive a notice from the IRS that you owe additional money, or that you have had collection actions taken against you, for a year in which you did not file a tax return.
  7. IRS records indicate you received wages or income from an unknown employer.
  8. You receive a 1099-G indicating you received unemployment income when you never filed for unemployment benefits.

If you've been the victim of tax ID theft, follow these steps to help minimize any damage done.

First, if you have been contacted by mail by the IRS, respond immediately by calling the number provided in the letter. If you file your tax return online and it is rejected due to a duplicate SSN, complete the Identity Theft Affidavit, or Form 14039. You should also fill out this form if the IRS instructs you to do so.

Be sure to also file a complaint with the Federal Trade Commission by going to identitytheft.gov, where you'll receive a personal recovery plan to help you move forward.

Your next step is to monitor your credit reports and take steps to protect your credit scores. You can create a free myEquifax account at my.equifax.com and place a one-year fraud alert on your credit reports. Once you have added a fraud alert with Equifax, the other two nationwide credit bureaus—Experian and TransUnion—will be notified.

A fraud alert will let lenders know that you may be a victim of identity theft and, as a result, they are encouraged or required to contact you before granting new credit, depending on the alert type.

You may also consider placing a security freeze on your credit reports through any of the three nationwide credit bureaus, which will restrict access to your credit history for the purpose of extending credit in your name. If you later want to apply for credit, you can temporarily or permanently remove the security freeze. Much like a fraud alert, it's easy to place a security freeze using a myEquifax account.

If you are a confirmed identity theft victim, the IRS will mail you a six-digit Identity Protection PIN (known as an IP PIN) on a CP01A notice each year. The CP01A notice includes instructions on how to use your IP PIN.

Starting in 2021, you may voluntarily opt into the IP PIN program, which is free, as a proactive way to protect yourself from tax-related identity theft. According to the IRS website, you must pass a "rigorous identity verification process" to participate in the program. Once you're part of the program, your spouse and dependents are also eligible for an IP PIN.

Finally, request copies of your credit reports from each of the three nationwide credit bureaus and proactively monitor your credit histories to ensure that everything is in order and no one has opened an additional account or line of credit in your name. You can get six free copies of your Equifax credit report each year when you sign up for a myEquifax account. You can also free weekly Equifax credit reports through April 2022 at www.annualcreditreport.com.

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