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Identity Theft and the IRS

BY Diane Bauer, CPA
10/31/2013 - 1:57pm

As everyone knows, taking steps to prevent identity theft should be a routine part of our daily, monthly and annual financial affairs.  Everything from guarding your credit card and bank account numbers to checking your credit report regularly and taking care not to divulge your social security number unnecessarily are important things you can do to help prevent what can be a frustrating and time consuming situation.

Unfortunately, thieves are finding new and unique ways to illegally obtain funds at someone else’s expense.  Over the last several years, the IRS has experienced an increase in identity theft occurrences and has stepped up efforts to assist legitimate taxpayers that have become victims. 

One way taxpayers are becoming victims of identity theft occurs when an identity thief uses a legitimate taxpayer’s information to file a phony tax return. Generally, the identity thief will use a stolen social security number to file a fictitious tax return in an attempt to get a refund.  They will usually file early in tax season before the real taxpayer files.  The taxpayer may be unaware that this has happened until they attempt to file their return later in the season.

Even taxpayers who have not had their social security numbers used illegally may be affected by this.  The IRS recently mailed a notice to a client of ours that was expecting a refund and required them to call a special phone number and answer verification questions before they would finalize processing the return.  The IRS will “lock” a legitimate taxpayers account if they suspect identity theft has occurred and will not process the return until the issue has been resolved.

The IRS has a separate section on their website at, relating to this topic.  In addition to assistance for actual victims, they have tips for taxpayers to help protect themselves from becoming victims of identity theft in the first place. 

It is an unfortunate reality, but we all need to be vigilant with our personal information. Please be careful with your information, keep an eye on your elderly parents’ affairs and remember, the IRS does not initiate contact with taxpayers by email.  If you believe you are a victim of identity theft, contact the IRS Identity Protection Specialized Unit at 1-800-908-4490.

Be sure to share this article to make others aware of what can happen if you are not careful.