Tax Data Identity Protection

Protecting your tax data is crucial in today’s digital world. Identity theft can compromise your financial security and lead to serious problems. Understanding how to safeguard your personal information and recognizing the signs of fraud can help you avoid potential pitfalls and keep your tax data safe and secure.

Steps to Take if Someone Filed a Return with Your Identity:

1. Confirm that you have not yet filed or that no one has filed a return or extension on your behalf, such as an old accountant or a family member.
2. Consider locking or freezing your personal accounts - your credit report or SSN, credit card, etc. - in case the person who used your identity can access those as well.
3. Fill out or complete your return and print out a copy.
4. Complete or fill out Form 14039, Identity Theft Affidavit.
5. Mail in your full return including Form 14039 - the IRS should contact you once they have received and reviewed your forms.
6. Consider applying for an IRS IP PIN to protect your identity.

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@alexiby

Related: Did someone wrongly claim your dependent?

Tax Return Fraud

Did you receive an email from eFile.com stating that you e-Filed a tax return - or that your return was accepted or rejected by the IRS - but you did not file this return at all? Somebody has filed a return with your data; either the SSN entered was a mistake but happened to match your SSN or you may be a victim of identity theft and tax fraud where a person intentionally filed a tax return with your data. Or, did the IRS send you any Letters 5071C, 5747C, 5447C, or 6331C?

If any of the above occurred, this does not mean that we at eFile.com committed the fraud. It more likely means that somebody used your tax data, either intentionally or by mistake. ID theft can involve someone stealing not only your Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN), but also your name, bank account, or credit card numbers, and using that information without your permission. Some ID theft starts with something as simple as someone stealing your wallet or accessing your mail. Look for the warning signs that that you might be a victim (or someone is attempting to) use your information for identity theft:

• You receive any IRS Authentication letters (5071C, 6331C, 4883C, 5747C) even though you haven't filed a return
• You receive a refund even though you haven't filed a return
• You receive a tax transcript that you didn't request
• You get emails or phone calls from a tax pro that you didn't initiate
• You receive an email notice that someone has created an IRS online account for you without your consent
• You receive an email or notice that someone has accessed your IRS online account, or someone has disabled your IRS online account
• You receive a balance due or other IRS notices that are not correct based on a return that you filed or about a return that has not yet been filed.

If you think you are a victim of identity theft and a fraudulent return was filed under your SSN, you can request a copy of that return. Complete this IRS Form 4506-F and mail it to the address on the form.

KEY TAKEAWAYS

• Regularly monitor your credit reports and bank statements for unusual activity to catch any signs of identity theft early on and address them promptly.
• Use strong, unique passwords and enable multi-factor authentication on all your online accounts to enhance your security against phishing attacks and unauthorized access.
• Be cautious about sharing personal information. Verify the legitimacy of requests for sensitive data and avoid providing such information through insecure channels.
• If you believe your identity has been stolen, it's crucial to file a police report and notify the Federal Trade Commission (FTC) to further protect yourself and report the crime.
• Review IRS notices and communication carefully. If you receive unexpected letters or tax documents, contact the IRS directly to ensure your tax records are accurate and secure.

We at eFile.com are committed to helping our clients and other taxpayers protect their data and to promote awareness of identity theft practices. Use the below resources if identity theft has affected you:

• Information about Identity Theft for Taxpayers.
• Steps to report identity theft to the IRS..
• IRS list of scams updated each year.

Review the following sections below for information on how identity thieves target individuals, what you can do to protect yourself from identity theft, and how to report identity theft to the IRS and/or state tax agencies.

Rejected Return Due to Duplicate SSN

If your return was rejected with the reason stating that your SSN was used on a previously accepted return, first look into your records to find if you have already filed. If you filed a full return or even used the IRS Free File or non-filer return, this is treated as a tax return for the year and any e-file attempts will be rejected by the IRS - not eFile.com.

If you are a confirmed victim of tax-related identity theft due to a duplicate or previously filed return under your SSN, complete and file Form 14039, Identity Theft Affidavit if your e-Filed tax return got rejected due to a duplicate SSN. Keep in mind that an already filed return under your SSN can also be the result of an honest mistake by another taxpayer, not necessarily the result of intentional identity theft,

Sign in to eFile.com and under 'My Account,' download your tax return PDF file. Print, sign, include your W-2, 1099 forms, etc., and mail your return to the IRS. Complete and print Form 14039 and follow the mailing instructions on the form. The IRS will then investigate your case and once the fraudulent tax return is removed from your IRS account, you will receive an IRS issued IP-PIN by postal mail at the start of the next calendar year or tax season.

As a confirmed identity theft victim, you can't opt out of the IP-PIN program unlike other taxpayers. IP-PINs will be mailed annually to confirmed victims and participants enrolled before 2019.

Lost IP-PINs can also be retrieved via the online account.

Register Account, Get IP-PIN

What Is Identity Theft?

Identity theft is the fraudulent use of an individual's private identifying information to commit fraud for financial gain. Identity thieves seek ways to gather personal information from unsuspecting individuals to commit fraud while the victims are unaware of the acts.

• During 2022, 5.2 million reports of fraud and identity theft or concerns were filed.
• In 2021, there were 5.7 million fraud reports with identity theft making up 25% of them at around 1.4 million.
  • Of these 1.4 million identity theft cases, nearly 400 thousand were fraud of government documents or benefits, closely followed by credit card fraud cases.
• In 2020, the IRS launched Identity Theft Central which has improved online access to information on identity theft and data security protection for taxpayers, tax professionals, and businesses.
• In 2020, possibly due to the COVID-19 Pandemic, identity theft cases rose from 2019, reaching a total amount of reported cases of just under 1.4 million. Of those, around 400,000 were fraud relating to government documents or benefits, 393,000 were credit credit fraud, and around 113,500 were employment or tax fraud.
• Between 2015 and 2019, the number of taxpayers reporting they were identity theft victims fell 80%. In 2019, the IRS received 137,000 reports from taxpayers compared to 677,000 in 2015. This was the fourth consecutive year this number declined.
• Between 2015 and 2019, the IRS protected a combined $26 billion in fraudulent refunds by stopping confirmed identity theft returns.
• For 2019, roughly 20% of all identity theft and fraud reports were found to be related to identity theft, amounting to just over 650,000 cases out of more than 3.2 million reports.
• Identity theft had seen a rise of 33% in recent years, according to Department of Justice figures. The good news is the IRS Criminal Investigation Division has helped convict almost 2,000 identity thieves. They also have over 1,700 open investigations.

You may be a victim of identity theft if you receive a notice or letter from the IRS that states one or more of the following:

• More than one tax return was filed using your SSN,
• You owe additional tax, have a refund offset, or have had collection actions taken against you for a year you did not file a tax return, and/or
• IRS records indicate you received wages from an employer you did not work for.

If you are the victim of identity theft and a fraudulent tax return was filed with your or your dependent's social security number, you can request a copy of that fraudulent tax return. You would then receive a masked or redacted tax return transcript of the fraudulent tax return filed using your SSN. Complete Form 4506-F or Identity Theft Victim’s Request for Copy of Fraudulent Tax Return. The mailing address is on the form.

How Are Identities Stolen?

Identity thieves use various methods to maliciously obtain personal information. One of the most common methods used to obtain electronic information is “phishing.” Phishing is a technique used by identity thieves to gather private and personal information by sending false electronic communications from a seemingly legitimate source. This may take the form of email communications or phone calls from a financial institution, such as a bank or a government agency.

Financial institutions and government agencies, as a rule, do not ask you for personal information, such as your social security number or password over emails and phone calls. For example, if the IRS wants additional information about a tax return you filed, they usually send you a letter in the mail, which includes information on how to contact them if you have questions about the notice.

If a person responds to a phishing email or provides personal information to a caller pretending to be the IRS, they may very well be sending would-be thieves the keys to commit fraud!

Here's some more information on phishing and email scams.

Protect Yourself from Identity Theft

There are a number of measures that individuals such as yourself can take to prevent your identity from being stolen or used fraudulently. Review this document for more details on identity theft.

Apply for an IP-PIN or Identity Protection PIN.

Online Safety

• Use security software for your computer or mobile device.
• Create strong, unique passwords for your devices and accounts.
• Use multi-factor authentication or two-step authentication. When creating an eFile.com account, choose to enable this when you sign in or enroll later under My Account > Security Center.
• When providing sensitive information, such as payment for an online order, use only secure websites with an "https" in the address bar as well as a padlock icon. Avoid entering sensitive data while on unsecured, public Wi-Fi networks.

Preventing Phishing

• Be aware of emails and/or phone calls asking for personal information from you (important: the IRS will never initially email or call you about a tax return; they will send you a notice in the mail first).
• Examine emails to see where they are coming from. Verify the sender as someone you know or a newsletter you have subscribed to.
• Never provide personal or confidential information to an unverified source. Protect your personal data by keeping it somewhere only you will see it.
• Contact the financial institution or agency to establish legitimacy of the email or phone call.
• Review bank and credit card statements for any unusual activity.
• Use security software with firewall and anti-virus protections. Make sure the software is always turned on and allows automatic updates. See these different security features used on eFile.com.
• Be aware of fake charities: you should not be pressured to donate; confirm the charity is real; make donations by credit card or check (gift card donations or money wiring are often scams). See more about charitable contributions and taxes.

Preventing Tax Fraud

• Follow steps above to prevent phishing.
• Carefully choose your e-filing or filing partner.
• Audit and examine your own books for any irregularities.
• Be aware of irregular practices, such as keeping two books and the use of Social Security numbers belonging to the deceased.
• Monitor any communication you receive from the IRS or tax agencies.
• Make sure your tax records are secure. If they are electronic, encrypt them with strong passwords.

Report Identity Theft to the IRS

If you believe you are the victim of identity theft, follow the steps below to report the tax fraud to the IRS:

1. Visit the Identity Theft Central section at the IRS.
2. Call the IRS Identity Protection Specialized Unit at 1-800-908-4490 for guidance.
3. Complete Form 14039, Identity Theft Affidavit, to prove that you're the real taxpayer (or on behalf of a deceased spouse or relative whose personal information was used to file a fraudulent tax return). This form must be filed and cannot be e-Filed - FileIT. If you're a victim of identity theft that is affecting your tax records, check Box 1 in Section A. However, if you identity was compromised, but it was not used on a fraudulent tax return, check Box 2 in Section A (you can also check this box if you had any personal belongings or Social Security cards stolen).
4. Mail Form 14039 to this address: Internal Revenue Service, Stop C2003, Fresno, CA 93888.
5. You may also need to file a police report and a complaint with the Federal Trade Commission on their website if you're a victim of tax return fraud.

Important: If you e-Filed your tax return and the IRS rejected it because your SSN was misused, you will need to paper file your return. Attach Form 14039 and other documentation to your paper return and mail it to the IRS address listed in Step 4 above.

Report Tax Fraud Return to the IRS

If you suspect that someone (or a business) has filed a tax return with fraudulent information and/or is not complying with tax laws, you can submit IRS Form 3949-A, Information Referral. You can submit this form either by mail or online and your identity will be kept confidential. You cannot report this information via a phone call to the IRS.

You can submit the Form 3949-A directly to the IRS online.

Here are examples of tax violations that can be reported via Form 3949-A:

• False exemptions or deductions
• Kickbacks
• A false or altered tax document
• Failure to pay or withhold taxes
• Unreported or unsubstantiated income
• Organized crime
• Failure to file a return
• Multiple filings or filing multiple returns
• Earned Income Credit violations
• Illegal wagering/gambling income
• Illegal drug income
• Public/political corruption

Report Tax Fraud to Local State Agencies

Generally, each state has either a telephone hotline or an address where an individual can file one's report, if not both. To report income tax fraud, either call a tax hotline or contact the department of taxation via the specified address. Some states require you to fill out a form to mail. Many states allow you to report tax fraud online.

In the table below, find each state, the phone number contact, the address to mail the form to, and whether or not it is required (Yes or No).

*This information is being researched and updated

States with online forms: Alabama, Arizona, Colorado, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas, Louisiana, Maine, Minnesota, Mississippi, Missouri, New Hampshire, New York, Pennsylvania, Utah, Washington, West Virginia, Wyoming. Please visit the states page for more information.

If you received an email from eFile.com about a tax return, but you did not file a return on our site, refer to our guide on how to report eFile.com account compromise.

Additional Tax Return Fraud & Identity Theft Information

• Identity theft publication 5027 with more details and resources
• eFile.com Privacy and Data Information
• Additional information on the eFile.com user agreement and cookie settings.

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