Identity Theft and the IRS
Authored By: Iowa Legal Aid
- Read this in:
- Spanish / Español
An identity thief may cause you problems with the IRS by using your social security number to file a false tax return or to use it to work. If the thief uses it to work, the IRS might assume the wages are yours and ask you to pay taxes on those wages.
Consider Tom's situation…
Tom lived in Iowa his entire life. He went off to college and answered an ad for a roommate. It turns out Tom's roommate wasn't so great. Tom's roommate moved out early. Tom ended up paying the roommate's share of rent on top of his own as well as all the utility bills. Last Tom heard his roommate was heading to Las Vegas to try his luck at Black Jack.
Two years later, Tom receives a notice in the mail that he has not claimed $20,000 in gambling winnings from 2009. In addition, Tom learns his former roommate has been working as a waiter at a casino in Nevada and hasn't claimed tips or wages of $30,000. Problem is Tom has never stepped foot in Nevada. He was a full-time student and earned minimum wage working on campus for 15 hours a week during 2009.
Tom filed his tax return claiming his wages and got a small refund. The IRS says Tom owes over $5,500 in taxes and penalties for 2009. Tom begins to suspect his former roommate is using his social security number and name in Las Vegas. Tom had a filing cabinet for his documents but realizes he left it unlocked most of the time. His roommate could have seen his past returns and information.
What should a taxpayer in Tom's shoes do?
First, Tom should go to IRS.gov and print a form 14039. It asks taxpayers to check one of three boxes.
- I am a victim of identity theft and I believe this incident is affecting my tax records (Provide a short explanation of the tax impact)
- I am a victim of identity theft and believe I may be at risk for future impact to my tax account
- I am a potential victim of identity theft and believe I may be at risk for future impact to my tax account.
Most often if the taxpayer has received an IRS notice indicating the taxpayer has income that is not his or hers and this income is reported under the taxpayer's name and/ or social security number the taxpayer is a victim of identity theft. Then the first box will be the most appropriate to check.
The second box is to be used if the taxpayer knows his or her identity has been stolen and thinks there is a possibility the person might use the stolen identity for work or tax purposes.
The third box is available when the taxpayer want to give the IRS a "heads up" but hasn't discovered any unauthorized use of personal information. This might be appropriate where a social security card is either lost or stolen but the person isn't sure which.
Secondly, taxpayers will be asked to give information about:
- What tax years may be impacted,
- Current address,
- Address used on the last return filed and
- Contact information.
In addition, the taxpayer will be asked to provide a photo copy of proof of identity such as a driver's license, passport, social security card or other federal identification that can be legally photocopied. In Tom's case, the IRS has sent a notice. The form 14039 should be sent back to the address listed in the notice for correspondence. Tom should make sure to check the box on the IRS notice that says that he does not agree with the proposed change to his taxes.
The IRS should contact Tom in response to this form. If the IRS does not call or write, Tom should call the IRS to make sure they are considering the information. The IRS may ask for additional proof such as a police report or proof that Tom did not live or work in the other state or at the other job. Proof that Tom was a full-time student in Iowa , a copy of his lease, and a letter from his employer should all be helpful. In Iowa, Tom has a right to file a report with the local police. Tom should do this and keep a copy for his records.
The IRS is supposed to put a marker on a taxpayer's account in response to a form 14039. If any unreported income shows up either currently or in the future, the IRS should do extra checking before assuming the income is truly the taxpayers. While this is the way it is supposed to work, taxpayers should not assume that turning in the form is the only response that will be required.
Victims of identity theft should be careful to open any mail from the IRS, review social security earnings statement each year to make sure earnings look correct, and challenge any proposed action by the IRS that the taxpayer thinks is wrong.
If you have a problem with identity theft and the IRS, Iowa Legal Aid's Low-Income Taxpayer Clinic may be able to help. Call 1-800-532-1275.