irs identity theft

Tax Identity Theft Awareness - How to Prevent IRS Identity Theft

Last updated on June 24, 2021

The festive season is over, and the tax season is upon us so it’s time to put away the decorations and dig up the receipts instead. Unfortunately, while some of us taxpayers are dragging our heels, those hoping to get in early with a spot of IRS identity theft are already hard at work.

Each year, the Federal Trade Commission dedicates a week to raising awareness about the different types of identity theft and especially IRS identity theft, among other tax season scams.

What is IRS Identity Theft?

IRS identity theft occurs when someone other than yourself uses your social security number (SSN), name, date of birth, or other personally identifiable information to impersonate you and claim your tax refund. In most cases, the victim of IRS identity theft only discovers there’s a problem when they attempt to file their own tax return, only to be informed that one already exists.

Indications that you’ve been a victim of IRS identity theft include:

  • The IRS sends you a letter asking about a suspicious tax return that you didn’t file
  • An online account is opened in your name without your knowledge or permission
  • You’re informed that you owe additional tax, or a refund offset for a year when you failed to submit a return
  • The IRS e-filing system rejects your tax return because it’s using a duplicate SSN
  • The IRS informs you that your online account has been disabled or accessed when you didn’t take those actions
  • Your IRS records indicate that you received income from an employer who you have never heard of
  • Bearing in mind that the “IRS says there were 649,000 confirmed fraudulent returns attempted to obtain $3.1 billion in refunds in 2018”, you can’t be too careful.

How Does IRS Identity Theft Occur?

The first step for any tax identity thief is to get his or her hands on the information they need to submit a fraudulent return – your social security number. There are many ways of doing this, from buying previously stolen SSNs on the Dark Web to hacking into company databases and stealing them.

As authorities implement more measures to combat identity theft, so the perpetrators become increasingly ingenious when it comes to scamming people into parting with their PII. According to the cybersecurity company, CyberScout, while the targets of IRS identity theft remain largely the same, namely, employers, taxpayers, payroll companies, and tax preparers, we should be on the lookout for a “stealthier” approach to accessing our PII in 2020.

CyberScout anticipates identity thieves continuing to use social engineering and various types of phishing attacks to get people to part with their valuable information but also expects an increase in ransomware attacks.

This approach would mean the hackers could freeze time-sensitive files, preventing tax preparers from accessing them, and unblocking them only once the ransom is paid. The trouble is, CyberScout founder, Adam Levin claims is that “sometimes a ransom is paid, the files are released and the hackers still use data that has been stolen to file false tax returns”.

With so many nefarious characters waiting to snatch your SSN and other PII away from you and claim your tax refund as well, taxpayers and employers alike need to be on their guard. Although there are some steps you can take to safeguard you PII more effectively, one of the easiest and most effective is with the best identity theft protection services.

Although this won’t prevent your SSNM from being stolen, it will detect if it is being shared on the Dark Web or being used without your permission, giving you a head start in terms of combatting the crime and limiting its effect.

How to Prevent IRS Identity Theft and Avoid Social Security Card Replacement

There are many ways to improve the security of your PII and especially your SSN so why not take the following steps and avoid having to complete an IRS identity theft form or apply for a social security card replacement?

1. Leave your Social Security card at home

As IRS identity theft requires an SSN, keeping it as safe as possible is one of the best forms of prevention. By leaving your social security card at home and making sure you don’t carry any document that shows your SSN, you’ll be taking the first step in the right direction

2. Keep your SSN to yourself

While there are some instances where you’re required to share your SSN, you should always make sure it’s absolutely necessary and that you know exactly who you’re giving it to. If you apply for government benefits, then you’ll have to hand over your SSN, similarly, you’ll need to share it when you get a new job, applying for a loan, or getting medical aid. In any other circumstances, however, think twice before sharing.

3. File Early

The earlier you file your tax return, the less chance an identity thief has of getting in there first. Whoever gets there in second place, however, will have their tax return automatically denied as a duplicate, so this is one race you definitely want to win.

4. Beware of Phishing

Not only is phishing used to steal your PII and commit IRS identity theft, but it’s also being used by so-called government imposters, to scam innocent victims out of money. Remember, the IRS will never contact you by email or SMS. Even if you owe them money, they will send a letter explaining the situation, so any communications that appear to be from the IRS that don’t come through your letterbox can be safely ignored.

5. File Safely

The convenience of being able to file your tax return online is undeniable but if you haven’t got the right cybersecurity protocol in place, you could be leaving your PII exposed. A VPN like ExpressVPN will encrypt your traffic so no one will be able to intercept it or, if they do, understand the contents, thereby making sure your personal information remains private.

6. Check your Credit Report

According to Federal Law, you can get a free copy of your credit report once a year from each of the main credit reporting companies. By doing so, you can ensure that all the information is up to date and accurate, and be able to pick up on the early warning signs that something is amiss and that you could be the next IRS identity theft victim

7. Choose Your Tax Preparer with Care

If you decide to take the route of using a tax preparer, don’t just opt for the first one you come across. Even if that person has a Preparer Tax Identification Number (PTIN), it doesn’t mean they’re reliable or even endorsed by the IRS. If your tax preparer is offering improbable returns, chances are, they’re as fraudulent as the people committing IRS identity theft.

What Are the Consequences of IRS Identity Theft?

The first and most obvious consequence of IRS identity theft is that you’ll struggle to submit your tax return and any refunds due to you will be delayed. Even if you complete the form 14039 and report the problem to the IRS, it will still take at least 120 days to resolve and, in the meantime, that same criminal is running around with your PII, potentially getting jobs, taking out loans, and obtaining credit cards.

If your social security card was also stolen, then you’ll have the added inconvenience of going through the social security card replacement process which will take another 10 to 14 days, assuming you have all the necessary documentation to complete it.

How to Deal with IRS Identity Theft and File the IRS Identity Theft Form aka Form 14039

How you deal with IRS identity theft depends, in part, as to how far the problem has gone and there are different processes for those who’ve received a notification from the IRS to those who have picked up on the problem independently.

Those victims of IRS identity theft who detect the problem after having their tax refund submission rejected, should take the following steps:

  1. If you are unable to e-file because a fraudulent return makes yours appear as a duplicate, you should file your tax return by paper instead
  2. Complete the IRS identity theft form (form 14039)
  3.  File your tax return and form 14039 together
  4. The IRS sends a letter acknowledging receipt of your return and form 14039
  5. Your case is referred to the Identity Theft Victim Assistance organization (IDTVA) who employs specially trained individuals to look for other returns on your account

The IDTVA will provide support by assessing the scope of each incident, addressing any additional issues, removing the fraudulent claim from your records and marking your account with an IRS identity theft indicator that is designed to protect you from future attacks.

The IRS is also introducing a PIN system to protect those most at risk. If you fall into that category, the IRS will mail you a six-digit PIN “to help prevent the misuse of their Social Security number on fraudulent federal income tax returns”.

For more information about what to do if your social security number is stolen, check out this article.

If you receive a notice from the IRS suggesting there may be a problem with your tax return or that duplicate returns have been filed under your SSN, you need to start dealing with the problem as soon as possible. The letter will usually give instructions on what to do next and a number for you to contact but will also detail the documentation you need to submit to resolve the situation. This includes the 4883C letter you received from the IRS informing you of the problem and a copy of your previous year’s tax return.

Identity Theft Resources

Although the IRS has introduced new safeguards and made it easier and quicker to report IRS identity theft, prevention is still much better than the cure, hence the FTC’s annual Tax Identity Theft Awareness Week.

Although the FTC’s Tax Identity Theft Awareness Week is aimed more at prevention than cure, the FTC’s guidelines on how to recover from IRS identity theft are among the clearest and most informative. Once you completed the necessary processes for the IRS, you should make sure other authorities are aware of the situation, including the three major credit bureaus who will place a fraud alert on all your records.

If you’re concerned about the security of your PII and want to know more about IRS identity theft and how to prevent it, why not sign up to one of the FTC’s tax identity theft awareness webinars or join them for a Twitter about what to do if you suspect you’re a victim of tax identity theft?

The ID Theft Center also has a mobile app available for both Android and iOS devices that delivers free advice on identity theft straight to your phone. The app is designed to limit the risks individuals take with their identities and provide 24/7 advice and assistance, helping victims track and resolve their cases faster.


IRS identity theft is going to claim more than just a few victims in the 2020 tax season but, hopefully, after reading this article, you won’t be one of them. Make the first step to preventing IRS identity theft today by getting your tax return process started.

Remember, if you’re going to do this online, it’s a good idea to use one of the best VPNs to encrypt your PII and keep your SSN to yourself. With the likes of ExpressVPN offering a 30-day money-back guarantee, if you only want a VPN for tax season, you can get the best for free.

Identity theft protection services are also a good way of picking up on the early warning signs so you can tackle the problem before it gets out of control. ID Guard not only monitors thousands of data sources, constantly checking for your SSN, but it also uses artificial intelligence to suggest vulnerabilities and improve your online security habits.

If you get these two cybersecurity tools in place and follow the guidelines given by the FTC, you should be well on your way to getting your tax refund long before anyone else can. Of course, no cybersecurity software can protect your social security card so leaving it at home is the best way to avoid having to get a social security card replacement.

Remember – the sooner you file, the smaller the risk of falling victim to IRS identity theft, so stop reading and get started!

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