When somebody uses your personal information to file a tax return you have been a victim of tax identity theft. According to the FTC there were more than 90,000 reports of identity theft in the first three quarters of 2020, even with those numbers tax identity theft is less common than other types of fraud.
Tax identity theft has decreased over these past few years, thanks to the IRS, state tax agencies and professionals in the field fighting together against refund fraud, and they formed a Security Summit in 2015. Thanks to this there was an 80% decline from 2015 to 2019.
Protect Your Identity
You can request an Identity Protection PIN (IP PIN) to the IRS. This involves applying for it online and doing a rigorous verification process, after you’re done with that the IP PIN is mailed to you and it will last for only a year. This works when you add your IP PIN to your e-tax return or paper tax return, and if it doesn’t have the correct PIN the IRS rejects it.
Signs of Tax Fraud
These are some typical signs that you should be aware of in case of tax fraud.
- The IRS can send you a letter to verify your identity in case they suspect you have been a victim of tax fraud
- You receive tax forms from a business you didn’t work in that year
- The IRS rejects your return because you have already filed a tax return (which you haven’t)
- You get a notice because you owe taxes
- Your unemployment agency send you a form 1099-G, but you didn’t file for unemployment