Identity Theft and Your Tax Records

How can someone steal your identity? Identity theft occurs when someone uses your personal information such as your name, Social Security number, or other identifying information, without your permission, to commit fraud or other crimes.

Identity theft is a serious crime. People whose identities have been stolen can spend months or years – and their hard-earned money – cleaning up the mess thieves have made of their good name and credit record. In the meantime, victims may lose job opportunities, be refused loans, education, housing or cars, or even get arrested for crimes they didn’t commit.

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Generally, identity thieves use their victim’s personal data to steal financial accounts and run up charges on their existing credit cards. However, the damage does not stop there. Identity thieves can also cause havoc with their victim’s tax records.

If your Social Security Number is stolen, it may be used by an undocumented worker or other individual to get a job. That person’s employer would report income earned to the IRS using your Social Security Number, making it appear that you did not report all of your income on your tax return.

An identity thief might also use your Social Security Number to file a tax return in order to receive a refund. If the thief files the tax return before you do, the IRS will believe that you already filed and received your refund.

If you do receive a notice from the IRS that leads you to believe someone may have used your Social Security Number fraudulently, please notify IRS immediately by responding to the name and number printed on the notice or letter.

Be alert to possible identity theft if the notice or letter states that:

  • more than one tax return for you was filed, or
  • IRS records indicate you received wages from an employer unknown to you.

If you receive a notice, contact IRS either by phone or in writing as directed in that notice. IRS tax examiners will work with you and other agencies, such as the Social Security Administration, to help resolve the problem.

If you do not prepare your own return, be careful in choosing your tax preparer – as careful as you would in choosing a doctor or a lawyer. The tax preparer you select will have access to your personal financial records. Ask your friends and coworkers to recommend a preparer they know and trust. Avoid preparers who claim they can obtain larger refunds than other preparers, or who guarantee results or base fees on a percentage of the amount of the refund.

Keep in mind that IRS does not initiate communication with taxpayers through e-mail. If you do receive this type of request, it may be an attempt from identity thieves to get your private tax information.