My Tax Refund Was Stolen, Now What?

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If you are a victim of tax-related identity theft, here are a few steps you should be sure to take to recover your identity.

You’ve filed your taxes and breathed a sigh of relief. Now all you have to do is kick back and wait for your refund to arrive. Or so you think, until you get a letter in the mail from the IRS, stating that more than one return has been filed in your name.

It can be a stomach-dropping shock to realize that someone has stolen your identity to file a fraudulent tax return and collect your refund. In the first half of 2013, 1.6 million taxpayers were hit by tax identity theft compared to just 271,000 in all of 2010, according to the Treasury Inspector General for Tax Administration. Consequently, the IRS paid out $5.8 billion in stolen tax refunds in 2013, according to a study by the Government Accountability Office (GAO).

A more recent GAO report stated that addressing tax refund fraud and identity theft were two of the IRS’s top weaknesses, meaning that we probably won’t be seeing a decline in tax-related id theft anytime soon. In fact, just this year TurboTax was forced to shut down their state tax return software until they could block users filing suspicious returns.

So what do you do once you realize your identity has been stolen and a false tax return filed in your name? Here are the steps you should follow:

Report the fraud:

Call the IRS Identity Protection Specialized Unit at 800-908-4490, or the number provided if you received an IRS notice. You will then need to print out, fill and mail an identity theft affidavit, known as IRS Form 14039, which tells the IRS they need to place an alert on your account. Also file a complaint with the Federal Trade Commission at or the FTC Identity Theft Hotline at 1-877-438-4338. If your state tax return was filed falsely, contact your state revenue agency. Finally, notify the police and file an official report with them. They may not investigate the claim, but the official report will allow other entities to help you out.

Collect proof:

“When you call the IRS about the ID theft, have old copies of your tax returns from the past two or three years out. It will move your case faster,” says Valrie Chambers, a CPA and Stetson University accounting professor. The IRS needs to know that you are the legitimate owner of the identity used to file multiple tax returns. You will also need to send out copies of your driver’s license, birth certificate, passport, two recent utility bills and, if you have one, your marriage certificate. Additional information allows the IRS to check your filed return against the fraudulent return, and mark yours as accurate.

Get protected:

The IRS should issue you a personal identification number after you fill out Form 14039, which adds another layer of security to your tax account. You will be required to use this PIN, along with your Social Security Number, when you file tax forms going forward. You will receive a new PIN every year if you are a victim of identity theft. If you are not a victim of id theft but would still like a PIN you may be able to apply for one, especially if you live in a state known for tax fraud, such as Florida or Georgia.

It can take the IRS about 180 days to resolve tax fraud cases. However, after that time your rightful tax return will be paid out to you as expected, even if the identity thief has not been located.

The thief might also have used your identity to open up credit cards and take out loans. After being notified of a false tax return filed in your name it is important to check your credit report and use a credit monitoring service to keep an eye on your credit file activity.

Credit monitoring is a great tool for detecting identity fraud, because it’s an ongoing review of credit accounts and credit inquiries associated with your personal information. Privacy Now’s direct data feeds from all 3 credit bureaus can rapidly track account inquiries and activity to provide near real-time alerts. Combined with the best early warning detection of new account openings, subscribers can take action—hopefully, before damage is done. No one likes to be the last person to know, with Privacy Now you don’t have to.