There's the version of tax resolution the late-night commercials sell you. Then there's how it actually works. I'm Darrin Mish, a Tampa tax attorney. I've spent 32 years on the inside of these cases. Here's the real version.
The Treasury Inspector General for Tax Administration (TIGTA) reports a total of 1.6 million victims of identity theft in the first half of 2013, compared to just 271,000 for the whole of 2010. In monetary terms, the 2013 payout of stolen tax refunds came up to $5.8 billion. Click here to read or watch more IRS Help resources.
If you are a victim of identity theft and lost your tax refund, here’s what you can do.
Report your loss immediately
You need to all the IRS Identity Protection Specialized Unit at 800-908-4490 and fill out some forms for the authorities to take action. The basic form to fill is the identity theft affidavit, or Form 14039. If it was your state tax refund stolen, you should do the same thing i.e. report it immediately to your state tax agency. Besides the IRS, you must make a police report. You would need to show that you have reported your loss to the police when dealing with government agencies or credit bureaus.
Submit any personal details
When your identity was stolen, the thief submitted a tax return using your name. Once you make a report with the IRS, the agency will verify your tax returns against the one filed by the thief. So you need to submit any personal details for verification purposes. For example, you should submit your children’s particulars, your marriage certificate (if married), your birth certificate, passport, driver’s license and utility bills. The thief would not likely know your number of dependents, whether you file jointly with your spouse etc. This makes it easier for the IRS to verify your tax return as the genuine one and reject the one by the thief.
Get a PIN number
The IRS issues a PIN number for all victims of identity theft, so that they can carefully check your account going forward. Here in Florida, you can request for a PIN number even if you have not fallen victim to identity theft. It is highly recommended.
Check your credit report
If your identity has been stolen, the thief may not stop at getting your tax refund. He may use your name for credit applications. So get a copy of your credit report from the major credit reporting bureaus and go through it to find any wrong entries not made by you such as an account you did not open or loan you did not apply for.
Obtain a credit freeze
Contact the major credit reporting bureaus and request for a credit freeze under your name so that no new creditors can view your credit score and report. You can obtain one for free when you produce a police report, it’s free. Otherwise, you may have to pay a small fee. On the other hand, if you choose not to do so, you should report your situation to the major credit reporting bureaus, TransUnion, Equifax and Experian. This will alert them and they will thoroughly vet through any application for credit such as a credit card or loan application made under your name.
Change your passwords
If you have an account online in websites like TurboTax, you should change your password immediately. Thieves know that many people use the same password for multiple sites. By changing your tax preparation website password, if the thief tries to use your TurboTax password for other sites like your online bank, he would not be able to log into your account.
Pray and hope
Whether you are religious or not, you should pray and hope for the best. The IRS estimates it will take about 180 days to resolve such cases and pay you your tax refund. If you cannot wait that long, contact the National Taxpayer Advocate at 877-777-4778.