Understanding Tax-Related Identity Theft

7/26/2023 - By Krystal Fisher

Tax-related identity theft occurs when someone steals your personal information to file a fraudulent return and claim a refund. Unfortunately, it has become increasingly more common and people often don’t discover they've been targetted until they try to electronically file their tax return and it is rejected by the Internal Revenue Service (IRS).

Reporting Fraudulent Returns

If your e-filed return is rejected because of a duplicate filing under your SS#, or if the IRS instructs you to do so, complete IRS Form 14039, Identity Theft Affidavit. Use a fillable format at IRS.gov and attach the form to your return and mail according to instructions.
You can get a copy of the return. See Instructions for Requesting a Copy of Fraudulent Returns. Complete Form 4506-F and mail or fax to the IRS.

What if Your Social Security Number is Compromised?

If your Social Security number is compromised and you know or suspect you are a victim of tax-related identity theft, the IRS recommends these actions:

Visit IdentityTheft.gov for steps you should take immediately to protect yourself and your accounts.
Respond immediately to any IRS notice: Call the number provided.
Keep records of all your correspondence and filings.
Place a fraud alert with at least one of the three credit bureaus (Experian, Equifax, & TransUnion).

Fraudulent Dependent Claims

If you e-file your return and get a message telling you that a dependent on your return has been claimed on another tax return or their own, or if you receive an IRS Notice CP87A, you’ll need to find out why someone else has claimed your dependent.

Using the Interactive Tax Assistant on IRS.gov, verify you meet the requirements to claim the dependent(s). Once you verify another person was not eligible to claim your dependent(s), you’ll need to take steps to protect your right to claim the dependent(s) and ensure an accurate filing. Learn more about what to do when someone fraudulently claims your dependents.

Navigating tax-related identity theft can be a time-consuming challenge. Contact your trusted tax professional for personalized guidance and consult IRS.gov for additional resources.

About the Author | Krystal Fisher

Krystal is a supervisor in the Tax & Accounting Services practice of Saltmarsh, Cleaveland & Gund. She has over 20 years of experience working with clients in various industries providing tax planning, new business consulting and tax calculations. Prior to joining Saltmarsh, Krystal was the tax operations manager performing entity services work, individual tax preparation, Form 1040 reviews and ITP management. Learn more about Krystal