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Tax-Related Identity Theft and How to Prevent It

Preventing Identity Theft

There’s a good chance you already know how to protect yourself against identity theft. But what about protecting yourself against tax-related identity theft? This fraud happens when someone uses your stolen SSN, name, address, date of birth, etc., to file a tax return.

Regarding identity theft, the IRS recommends that you take steps to safeguard your identity and report suspected incidents immediately. A tax attorney and Denver Business Attorney have prepared the article below to provide information about what you may consider as warnings or red flags that your identity has been compromised, and the thief is using your identity for tax-related purposes. Here are some tips to help you keep your identity safe when filing your taxes.

  • Log into your account using your username, password, and one additional piece of personal identification. For example, you could use your username, password, and cell phone number.
  • Use a secure browser like Chrome or Firefox. These browsers encrypt your web traffic, making it harder for hackers to intercept your login credentials.
  • Never give out your username and password over the phone, text, or email. Instead, call customer service or send an email to the company directly.
  • Check your credit reports regularly to ensure no one else has used your personal information to open accounts in your name. You can check your free annual credit reports once per calendar year from the three major nationwide consumer reporting companies — Equifax Credit Report Company, Experian Information Solutions Inc., and TransUnion LLC.
  • File your taxes electronically whenever possible. When you use electronic forms, your tax returns will be sent directly to the IRS.

Be Aware When Identity Theft Is Happening

Identity thieves are continually looking for ways to steal identities. They use many methods, including phishing emails, social engineering, fake websites, phone scams, etc. If you think you might be a target, here are some things you can do to protect yourself.

Taxes and Identity Theft

If your Social Security number is stolen and used in connection with a fraudulent tax return, it could mean trouble. You might be reported to the IRS and the Social Security Administration. And if you receive a letter saying your refund has been suspended, it doesn’t necessarily mean there is something wrong with your return; it could simply be due to a mistake by the IRS.

To avoid problems, ensure you don’t give your Social Security number to anyone, including friends, family members, employers, or banks. Also, watch out for common scams such as fake IRS notices and letters claiming your wages have been garnished.

Identity Theft Of Personal Data

Keep Identity Theft From Your Personal Information

Not all data breaches or computer hacking incidents result in tax-related ID theft. But it’s still important to know what type your personal information was stolen. Here are some tips to help you avoid becoming a victim of identity theft:

  • Keep your financial records stored securely.
  • Know where you bank.
  • Use different passwords for each account.
  • Check your credit report regularly.
  • Monitor your credit card statements daily.
  • Report suspicious activity immediately to your financial institutions.

Employment-Related Identity Theft

If you think you might be experiencing identity theft related to your Social Security Number, it’s crucial to take action. You could be putting yourself at risk for further harm. In addition, you may want to consider contacting law enforcement to report the crime.

Identity thieves often use stolen information to file fraudulent tax returns in your name. They do this because they know that the IRS won’t investigate unless multiple cases are reported. This makes it easier for identity thieves to steal your money.

Sometimes, the thief may use your SSN to obtain credit cards, loans, bank accounts, or even medical treatment.

You can help protect yourself against this type of fraud by knowing what transactions occur around your Social Security Number. Look out for suspicious activity like large purchases of merchandise online or requests for wire transfers. Also, keep an eye out for unexpected charges on your credit card statement.

If you suspect that someone is trying to defraud you, contact your local police department immediately.

Common Signs Of Identity Theft

Apart from an identity thief stealing your social security number or obtaining credit cards or bank account information, an identity thief may use your personal information and steal your identity for tax purposes and tax-related theft. Although the Internal Revenue Service and state taxing authorities work hard to prevent identity theft, you can assist your assist by being aware of common signs of tax-related identity theft.

  • When you file your tax return electronically, the return is rejected. The message may state that a return with a duplicate social security number or tax identification number has already been filed. This may mean someone uses your social security number to file a tax return. You may want to check the social security number you used, but if the social security number you are using is correct, your identity may have been stolen. The Internal Revenue Service has an identity theft affidavit (Form 14039) that can be filed with the IRS. Please see the instructions for Form 14039 and any related forms.


  • The Internal Revenue Service may forward you a letter requesting that you verify whether you have filed a return with your name and social security number. When the IRS receives a suspicious return, the IRS may hold the return and mail a letter to the taxpayer to verify certain information. If you did not file the return, someone is likely attempting to steal your identity for a tax-related purpose.

  • Suppose you receive a W-2 or a 1099 (or other items) reported to you for the income you did not receive or from third parties you did not work for or perform services for. In that case, someone may have compromised your identity and reported income under your social security number.


  • You receive a check from the United States Department of Treasury as a refund that you did not claim. If the refund is incorrect, you likely do not want to deposit the check and should contact the IRS or a tax attorney.


  • You receive a wage and income transcript, account transcript, tax return transcript, or other tax return transcript from the Internal Revenue Service that you did not request. Identity theft may be attempting to test or receive information via a transcript.

The Internal Revenue Service has information about identity theft, including Publication 4524.

The article above has been prepared for informational purposes by John McGuire, a tax attorney at The McGuire Law Firm.  Please consult with your tax attorney, tax advisor, or other parties regarding our specific questions. Call (720) 833-7705

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