The closer we are marching towards achieving absolute digitalization, the increasingly exposed we are being to the prying eyes of the present-day swindlers who are always peeping through their screens to discover the slightest of opportunities to attain their act of embezzlement. The reams of information, both personal and professional, being uploaded to the web resides on thousands of servers worldwide and are being tried to be accessed by some fraudster or the other.
Accountants and tax professionals are the most popular targets of these internet fraudsters. Attempting to steal a tax professional’s identity, the modern cybercriminals aim to get their hands on the critical information of their clients and set out to create fraudulent returns and claim fake reimbursements. Identity theft is vital trouble for both individuals as well as tax professionals and accountants. They result in financial losses worth billions of dollars every year.
Identity theft, comparatively easier to accomplish and monetize, rules the realm of cybercrime. Credit card numbers, social security numbers, and other confidential identities are easily stolen and are either traded on the dark web or misused by criminals to earn easy profits.
The following are some of the key statistics related to identity theft in the United States:
- According to the Federal Trade Commission (FTC) data, out of more than 3.2 million fraud cases reported in 2019, identity theft accounted for about 20.33 percent of them and was the most prevalent type of fraud.
- People aged 30 to 39 reported the most number of identity theft cases in 2019.
- In terms of population affected by identity theft, Georgia, Nevada, and California were the top three victim states.
- By the end of July 2020, the Federal Trade Commission had fielded about 150,000 fraud reports that were related to COVID-19 and stimulus.
Identity theft can easily strike anyone, irrespective of race, age, sex, or economic background of the victim. The United States’ Internal Revenue Service (IRS) puts forth an Identity Theft Victim Assistance program to help victims of identity theft.
What is Identity Theft Victim Assistance?
The Internal Revenue Service (IRS) acknowledges the fact that identity thefts are both confusing and frustrating for victims and hence, commits to resolve identity theft cases as fast as possible. Identity Theft Victim Assistance (IDTVA) is an outcome of the same commitment that aims to help identity theft victims by shortening the time duration to resolve these issues, no matter how complex.
The IRS’s form 14039, an ID Theft Affidavit, should be submitted in response to an unauthorized attempt at stealing your identity or personal information.
How Does the IDTVA Work?
There are primarily two ways in which the Identity Theft Victim Assistance works. Either a victim can notify the IRS about a suspicious activity leading to tax-related ID theft, or the IRS, on identifying a suspicious return with a taxpayer’s name, tell him/her about the activity. However, the IRS can only recognize an identity theft victim once they begin processing tax returns or launch an audit.
The following are the general outlines of what you, as an identity victim, can expect in both cases:
1. You Reporting a Tax-related Identity Theft Activity to the IRS
You can report an incident of tax-related identity theft to the Internal Revenue Service as soon as you learn about it. If you e-file a tax return and it gets rejected saying the return has been already filed using your Social Security Number (SSN), then it is an obvious sign that you have been impersonated by some fraudster. In that case, you must immediately report the matter to the IRS.
Here’s what you should do to notify the IRS of the same:
- Being unable to e-file your tax, you should file a paper tax return
- Complete the Identity Theft Affidavit, form 14039 of the IRS, and attach it at the end of your paper tax return.
- Identify the location of the IRS in your state and mail the consolidated document to them.
After you have sent the documents to the IRS, you will receive an acknowledgment letter from the IRS, confirming the receipt of your Identity Theft Affidavit (form 14039). The IRS will then assign your case to their Identity Theft Victim Assistance (IDTVA) organization where the incident would be thoroughly researched and resolved by an identity theft specialist.
The following are the steps that the IDTVA incorporates in order to find a resolution to your identity theft case assigned to them:
- Assessment of the extent of the issue to determine whether the ID theft incident affects a single tax year or multiple years.
- Thorough research of all the cases associated with the reported fraudulent return. This includes recognizing more victims that you may not know about, but are mentioned on the return.
- Further assessing the incident to authenticate and verify all the victims’ names, their addresses, and Social Security Numbers (SSNs). This helps them confirm whether the details mentioned are accurate or illegitimate.
- Running a case analysis to find out if all outstanding problems were addressed or not.
- Certifying your tax return is processed properly and identifying the dues. In case you have a refund due, then releasing the same.
- Removal of the fraudulent tax return from your records.
- Finally completing their work on your incident by marking or tagging your account with an ID theft indicator that will help safeguard your identity in the future.
Once your case has been resolved, the IRS will notify you of the same. The IRS’s IDTVA typically takes less than 120 days to resolve an identity theft incident, but incidents having more complexity may take up to 180 days or more.
Further, the Identity Theft Victim Assistance organization has an Identity Protection (IP) PIN Program in which it picks particular tax-related ID theft victims and assigns a fresh, six-digit IP PIN to help put a stop to the misuse of their SSNs on fraudulent tax returns.
2. The IRS Notifying You of a Suspicious Return on Your Name
The Taxpayer Protection Program of the IRS regularly monitors your tax returns to identify a dubious tax return with your name and Social Security Number. In case it discovers a suspicious return, it notifies you. The program proactively recognizes and stops the processing of ID theft tax returns to aid taxpayers whose IDs are used while filing those fraudulent returns. The IRS takes many precautionary steps as there can be numerous reasons behind a return appearing dubious to them.
The following is what you can expect in this entire scenario:
- The IRS may send you the 4883C letter, demanding verification of your identity within a period of 30 days.
- After receiving the 4883C letter, you are required to follow the instructions of the letter to confirm your identity.
- The letter contains a toll-free number that you are supposed to call. You must ensure you have the letter handy with you while calling the Taxpayer Protection Program.
- You also need to have a copy of a tax return you filed during the previous year, in case you filed one, in order to verify your ID.
- Confirm your identity with the program’s representative on the call. In case you fail to verify your identity, you might be asked to be physically present at an IRS Taxpayer Assistance Center. You are supposed to provide a picture ID along with the 4883C letter coupled with a copy of the affected tax return, in case you had filed one.
- On receiving similar notices of suspicious returns, You are not required to complete the Identity Theft Affidavit (the form 14039), unless told to complete one.
- After verifying your identity, you can inform the IRS whether or not you filed the tax return being discussed.
- The IRS, once confirming that you did not file the return, will erase it from your tax records. It further recommends you file a paper tax return for the present filing season.
- In case you did file the tax return, the IRS will release it for processing, after making sure it has no mathematical errors, missing returns, or schedules. Once the process is completed, you will be issued your refunds.
The time of resolution of these identity theft incidents depends upon their complexity as well as the volume of work. Once the IRS resolves tax issues related to your account, it marks it with an identity theft indicator to make sure it remains protected in the future. Here too, the IRS recognizes certain ID theft victims to place them into the IP PIN program to ensure their SSNs are not misused for filing fraudulent tax returns.
Additional Steps You May Require to Take as an Identity Theft Victim
In order to determine if you are required to follow other steps in addition to those discussed above, you may:
- Go through the recommendations of the Federal Trade Commission.
- Check with your state tax agency to learn about additional steps to follow at the state level.
Additionally, you should:
- Make sure you are using quality security applications and incorporate other recommended practices that ensure your personable identifiable details are protected, even while you are surfing or shopping on the internet.
- Be aware of phishing scams that attempt to steal your private information.
- Participate in awareness campaigns like Taxes. Security. Together. These campaigns are supported or organized by the Internal Revenue Service (IRS), various state tax agencies, and the US tax industry, and are aimed at helping you learn about tax, security, and the right practices.
The IRS’s Identity Theft Victim Assistance organization plays an important role in recognizing and preventing identity thefts. It not only makes sure your sensitive information is protected but also assists you in nullifying the effects of identity theft, in case you become a victim of one.