Identity theft is an increasing concern for taxpayers, and unfortunately, tax season is a prime time for fraudulent activity. When someone uses your personal information—most commonly your Social Security number—to file a tax return, it can delay your filing, disrupt your refund, and require additional steps to resolve.

Understanding how tax-related identity theft happens, how it impacts your return, and what to do if it occurs can help you respond quickly and protect yourself moving forward.

 

What Tax-Related Identity Theft Looks Like

Tax identity theft typically occurs when a fraudster files a tax return using your Social Security number before you do. Their goal is usually to claim a fraudulent refund.

Some of the most common signs include:

  • Your e-filed tax return is rejected because a return has already been filed under your Social Security number
  • You receive an IRS notice about a return you did not file
  • You receive notices showing income from an employer you don’t recognize
  • You are issued a refund you were not expecting
  • IRS records indicate activity on your account that you did not initiate

In many cases, taxpayers only discover the issue when they attempt to file their return or receive unexpected correspondence from the IRS.

 

How Identity Theft Affects Your Tax Return

When identity theft occurs, it can significantly delay the processing of your legitimate tax return. The IRS must pause processing to verify your identity and determine which return is valid.

This can result in:

  • Delayed refunds while your identity is verified
  • Additional IRS correspondence and documentation requests
  • Temporary holds placed on your tax account
  • The need to file additional forms or provide proof of identity

While the situation can be frustrating, the IRS has procedures in place to resolve identity theft cases and ensure the correct return is processed.

 

What To Do If You Suspect Identity Theft

If you believe your identity has been used fraudulently for tax purposes, taking prompt action is critical. Here are the key steps:

  • Contact your tax professional immediately so they can help guide your response
  • Respond quickly to any IRS identity verification requests (such as letters asking you to confirm your identity)
  • Complete IRS Form 14039 (Identity Theft Affidavit) if advised
  • Continue filing your tax return, even if you need to submit it by paper
  • Monitor your IRS account and transcripts for any unusual activity

Your tax professional can help ensure that the appropriate steps are taken and that communication with the IRS is handled correctly.

 

How to Protect Yourself Going Forward

While not all identity theft can be prevented, there are several steps you can take to reduce your risk:

  • Request an Identity Protection PIN (IP PIN) from the IRS to add an extra layer of security to your tax filings
  • Safeguard sensitive information, including your Social Security number and tax documents
  • Be cautious of phishing emails, texts, and phone calls claiming to be from the IRS or other authorities
  • Work with a trusted tax professional to prepare and file your return securely
  • Consider placing a credit freeze or fraud alert with major credit bureaus

Staying vigilant and proactive can go a long way in protecting your personal and financial information.

 

We’re Here to Help

Dealing with identity theft can feel overwhelming, but you don’t have to navigate it alone. If you receive a notice, experience a filing issue, or suspect fraudulent activity, reach out to your team at DHA CPAs. We can help you understand the situation, take the appropriate steps, and work toward a resolution as efficiently as possible.