Biz Tips: Refund Denied: What to Do if You’re a Victim of Tax Fraud

Biz Tips: Refund Denied: What to Do if You’re a Victim of Tax Fraud

Biz Tip:

Refund Denied: What to Do if You’re a Victim of Tax Fraud

Rejected Tax Notice

Now that April 15th has come and gone, it’s still critical for you to stay vigilant and to keep a watchful eye for any suspicious activity that may signal tax fraud.

Fraudsters have been busy, and may have already been working behind the scenes to steal your refund. The 2018 Consumer Sentinel Network Data Book classifies tax fraud as one of the top three reported types of identity theft submitted to the Federal Trade Commission.

How Do I Know If I am a Victim?

Tax returns are commonly rejected if filing errors are found. If you are concerned you have been a victim of identity theft and tax fraud this year, keep an eye out for the following red flags:

  • You received a denial notification when filing your taxes electronically because your Social Security Number has already been used to file a return.
  • Your tax refund arrives before you file, is significantly sooner than expected, or does not arrive at all.
  • You receive a tax return that is much higher than you anticipated.
  • You discover you owe the IRS more money than you thought and can’t find an explanation for the discrepancy in your income or deductions.

Remember, you will only learn about your tax rejection through a physical letter from the IRS or denial notice from your tax preparer/e-file service. If you receive an email or phone call from the IRS, it is a scam!

How Your Information Can Be Used for Tax Fraud

Once your personal and tax information is accessed by cybercriminals, it’s easy for them to start causing damage and file taxes in your name. Here are a few ways your personal information can be used against you to commit Tax ID Fraud:

Verifying and Safeguarding Your Identity

Tax fraud can be devastating. Know the 4 key steps to take if you become a victim:

  1. If your E-File return was rejected, start by filing a paper return. Include a completed Identity Theft Affidavit Form 14039 with your return.
  2. File a police report to have a record of your identity theft and evidence to prove your identity.
  3. Contact the IRS at the Identity Protection Specialized Unit. You may be asked to verify your identity through the phone, online, or at your local IRS office. Be prepared to answer questions regarding your address, date of birth, mother’s maiden name, last tax filing information or places of work you have previously claimed on past taxes.
  4. Place a freeze and fraud alert warning on your credit.

Expect a delay in receiving your refund if you are a victim of tax identity theft and keep an eye out for an Identity Protection Pin (IP PIN) next year.

5 Tips to Safeguard Your Tax Identity

  1. Store your tax documents securely. Keeping your Social Security Number and W2s safe and out of sight is critical.
  2. Use a trusted tax preparer. Be wary of preparers that recommend inflating your earning or deductions. Ask for a Preparer Tax Identification Number before providing any of your personal information.
  3. Request an Identity Protection PIN. If you believe you are a victim of identity theft and have filed a report with the IRS, you may be eligible for an IP PIN, which will prevent criminals from filing taxes on your behalf. Residents in several states, such as Florida, California, and Maryland, can also request an IP PIN even if not a confirmed identity theft victim.
  4. Protect your personal identity. Invest in identity theft protection for you and your family as an extra layer of security.

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