At the end of March I started to organize my tax return information so that I could file my taxes for the year.
As I was pulling all of my information together I received a letter in the mail from the IRS.
“That's strange”, I thought. “I haven't filed my taxes yet? It seems a bit after the fact for them to be contacting me about last year's taxes”?
As I opened the letter I quickly realized that I had been the victim of identity theft.
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Receiving A 4883C Letter From The IRS
During 2014, the IRS stopped more than $15 billion of fraudulent refunds, including those related to identity theft. (source)
The letter that I received in the mail is called a 4883C Letter. It is sent in order to verify the taxpayer's identity, and to confirm that the taxpayer did in fact file the tax return in question. Here's an explanation of the letter from the IRS:
We received your federal income tax return; however, we need more information to verify your identity in order to process it. The letter you received provides a toll-free IRS Identity Verification telephone number to call. We will continue processing your tax return once we verify your identity and confirm that you submitted the return. If you did file the return, please know it will take approximately nine weeks to process it once you verify your identity. Please call the toll-free IRS Identity Verification telephone number, 1-800-830-5084. You will need to have a copy of your prior year tax return and your most recently filed tax return. The toll-free IRS Identity Verification telephone number is available for you to call even if you haven't filed a tax return for this year.
The letter asked me to confirm that I had in fact filed a 1040EZ tax return by calling a phone number and verifying certain information.
Since I had not filed my return for the year yet, and since I don't usually file a 1040EZ anyway, I knew that someone had stolen my identity and had attempted to file a fraudulent tax return in my name.
Time to take action.
Javelin Strategy & Research found that in 2015 there were over 13.1 million victims of identity fraud in the U.S., with losses around $15 billion dollars.
So what should you do when you receive a 4883C letter, or a similar identity verification letter (like Letter 5071C )? Here's are some steps you can take with the IRS:
- Follow up immediately to the IRS notice you've received. Call the phone number provided on your letter, or if it gives it as an option, via http://idverify.irs.gov. When you call make sure to let them know that the tax return that was filed in your name is fraudulent.
- Complete IRS Form 14039, Identity Theft Affidavit. If a fraudulent return has been filed, you'll be required to fill out this form telling what you know about the identity theft that occurred. You'll also likely need to send your tax return in via actual physical forms this year (no e-filing).
- File and pay your taxes as you normally would. You will still need to pay your taxes and file your tax return as normal. You will likely be required to file paper returns this year, however, along with your Form 14039 ID Theft Affidavit.
When your identity has been stolen and used to file fraudulent tax returns, it's important to make sure to let the IRS know as soon as possible what has happened. Make sure to fill out the appropriate forms, and if needed, file your returns via paper tax return forms.
Are there other steps you should take when you've been the victim of identity theft?
Steps To Take With Any Identity Theft
In any case of identity theft, here are some steps you can take.
- File a police report: If you are certain you've been a victim of identity theft, you may want to file a police report with your local police. I did this with my city's police department, and they gave me a case file number to include on my Identity Theft Complaint to the FTC. Filing a police report can also help later on if you're trying to close accounts, or when trying to prove that you did not open fraudulent accounts.
- File a complaint with the FTC: Go to the government site at identitytheft.gov and fill out a complaint with the FTC, or call the FTC Identity Theft Hotline at 1-877-438-4338. The site also has some helpful tools including a “ID theft recovery plan” which I found very helpful.
- Place a fraud alert on your credit file: Contact one of the three major credit bureaus to place an initial ‘fraud alert’ on your credit records, which is good for 90 days. If you know you're a victim, you may want to request an extended fraud alert, which is good for 7 years. Once an alert has been placed with one of the bureaus, they are required to alert the other two, so you only need to call one. Contact information for the 3 credit bureaus:
- Equifax, Equifax.com, 1-800-766-0008
- Experian, Experian.com, 1-888-397-3742
- TransUnion, TransUnion.com, 1-800-680-7289
- Freeze your credit: If you believe the identity theft is especially bad, you may even want to freeze your credit. Freezing your credit will need to be done with each credit agency, and may carry a small fee. I've done this with my credit files.
- Check your credit reports: While you may have discovered the ID theft via the tax fraud, that may not be where it ends. Be sure to check your free credit report from each of the three bureaus to ensure there are no new accounts opened in your name, or other irregularities. Check your 1 free yearly credit report from each bureau via AnnualCreditReport.com. If you place an extended fraud alert on your account, in the first 12 months you'll get 2 free reports from each agency.
- Follow up on what you find in your credit report: Contact your banks and credit card companies, and close any financial or credit accounts opened without your permission, or that you believe were tampered with by identity thieves.
- Review your Social Security Administration records annually: Sign up for My Social Security at www.ssa.gov and make surethat everything appears as it should.
The steps above are some of the first steps you'll need to take, but after your initial reports you'll likely want to keep a close eye on your credit for the next couple of years, making sure that no further fraud is perpetrated.
It's Best To Avoid Tax Fraud In The First Place
In my case the tax related identity theft was caught by the IRS before it made it all the way through. While it was a hassle dealing with the identity theft since I had to spend a few hours filling out the proper forms, filing a police report and more, thankfully no lasting damage was done.
It's best to avoid tax fraud in the first place if you can, so you don't have to deal with the mess I've been through.
First and foremost, file your taxes as early as you can. The earlier you file, the less likely the fraudsters will be able to file a fraudulent return, and have it go through.
Second, always be sure to use a good and updated security software, along with a firewall. Make sure you have strong passwords.
Third, don't fall for phishing emails, threatening phone calls or texts from scammers posing as legitimate organizations like the IRS. Don't click on links or attachments in suspicious emails.
Finally, make sure to protect your personal information. Don't carry around your Social Security card, and shred any paperwork that has personal information on it before you throw it out.
Having your identity stolen can leave you feeling violated, and scrambling to put the proper paperwork, forms, reports and fraud alerts on file. While it is never fun, if you get your ducks in a row quickly it doesn't have to be as crippling as it could be. Report the fraud, put the proper checks in place moving forward, and move on.
Have you ever been the victim of tax related identity theft, or ID theft in general? Tell us your experience in the comments.