Tax-related identity theft has increased substantially in the past couple of years. More and more individuals are finding out that fraudulent tax returns have been filed under their social security number. Not only does this create a reporting nightmare, but the victim must also try to retrace the steps of the person who stole their social security number in order to make sure things like their credit report have not been damaged.
According to the IRS, identity theft cases have increased by more than 650% from 2008 to 2012. At the end of 2012, the IRS had almost 650,000 identity-theft cases in its caseload. If a fraudulent tax return is filed under your social security number, several problems arise such as:
If you are trying to apply for a mortgage or loan, many times the mortgage company will pull your IRS account transcripts. If a fraudulent return was filed, your transcript will show the fraudulent information as well as the information which you reported.
If a fraudulent return is filed under your social security number, and subsequently you file a return claiming a refund, the refund due to you is not paid until the IRS fully resolves your case which could take several months.
Many states match the information on your IRS account to the state return which you filed. If there is a discrepancy in this information, they will issue a notice to you adjusting your state income tax information. Many times this results in an amount due, and the state will not stop trying to collect on the amount due until the IRS fully resolves your case (which again could take several months). We have seen some states try to file liens against a taxpayer’s assets.
Here  is the IRS guide to identity theft. You may be a victim of tax-related identity theft if you receive an IRS notice that indicates:
- More than one tax return has been filed under your social security number
- You have a balance due for a year you did not file a tax return
- IRS records showing that you received wages from an employer unknown to you
If you find you are a victim of tax-related identity theft, you must notify the IRS immediately. You will need to fill out Form 14039 Identity Theft Affidavit  and mail it to the IRS identity theft unit. You should also notify the Social Security Administration and your financial institutions as well as file a police report.
Please contact us  if you think you have been the victim of tax-related identity theft or if you have any additional questions.