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The Resource Center Identity Theft & Protection | post

Your identity stolen? Don’t file the wrong form with the IRS.

by Joe Mason on

We've talked several times about the tens of thousands of fraudulent federal income tax returns that have flooded into the IRS over the past several tax years. Donna Miller, a preschool teacher, was typical. She filed her return, but it was rejected because a return in her name had already been filed.

Like many caught in this situation, she picked up the phone and called the IRS, first at an 800-number and then at the local district office. She was passed from person to person and finally told she needed to file IRS Form 3949-A, known as an information referral, which is used to report suspected tax fraud activity. She downloaded it, filled it out and sent it off. She didn't hear back from the IRS.

Now thanks to a new report from the IRS's Inspector General J. Russell George, we and she knows why. It seems that the 3949-A is the wrong form to file to report identity theft.

Based on a tip from an IRS employee whistleblower, the IG found that thousands of victims of identity theft had used form 3949-A and, because that form was not intended to report Identity Theft, the information they contained was not acted upon, and eventually the forms were simply destroyed without notifying the victims who had filed them.

The form 3949-A is meant to be used to report "fraud" or "tax violations." There are check boxes for things like False Exemption, False Deductions, Multiple Filing, Unsubstantiated Income, Kickbacks, False or Altered Documents, Failure to Pay Tax, Unreported Income, Failing to File Returns, or Failing to Withhold.

The Inspector General notes of the Identity Theft submissions on the wrong form "(were) destroyed due to a lack of procedures on how to process these claims. Victims were not notified." Then, he noted "reporting guidelines provided to taxpayers and employees are confusing and inconsistent."

Last year the IRS received some 116,307 submissions on IRS Form 3949. Many sought to grab rewards for turning in tax cheats. But others were identity theft victims who were told to use the forms. The IG determined that overall "the IRS is 'not efficiently or effectively' processing these forms."

It turns out the IRS has a different form specifically covering suspected identity theft fraud. It is Form 14039 "Identify Theft Affidavit." This is the correct form to use if you feel you are the victim of identity theft. It asks you to supply a plethora of information and documentation. But this is a new form that came into existence only last December and many at IRS do not, apparently, even know of its existence.

So, if you become a victim of identity theft when you try to file your Federal Tax return, and I certainly hope that never happens to you, you will need to download and fill out Form 14039, and with it submit the information it requires as a starting point to straightening out the mess you now face.

You can find the form here:

I hope you never have to use it.