The National Taxpayer Advocate (NTA) is an internal watchdog for consumers within the IRS. Each year the NTA is required to issue two reports. A few days ago Nina Olson, the National Taxpayer Advocate issued her midyear report and it was not very complimentary in regard to the response of the IRS to victims of income tax identity theft. Income tax identity theft where an innocent taxpayer’s Social Security number is used by the thief to file an income tax return in the name of the victim claiming a substantial refund based generally upon counterfeit W-2s results in not only losses to the IRS and, by extension the federal treasury, but also causes the victim’s tax return to be flagged and investigated in great detail before the innocent victim finally receives his or her legitimate income tax refund and it is here that the National Taxpayer Advocate found the IRS to be failing. With present IRS filters, more than 600,000 legitimate returns of taxpayers were screened and frozen as suspicious last year, but the IRS’ programs for completing the investigations of those returns and getting the innocent victims their rightful refunds are seriously lacking. Only 17% of telephone calls from innocent taxpayers whose tax returns had been frozen as suspicious were even answered and during three consecutive weeks during filing season this figure dropped to 10%.
In addition, although the IRS has made some progress in assisting the innocent victims of income tax identity theft in getting their legitimate refunds, it still takes, on average, 278 days to resolve the claim of a victim of income tax identity theft although the IRS routinely tells taxpayers that they can expect their claims to be resolved within 180 days.
So what should you do if you are a new victim of income tax identity theft? Filing a police report immediately is very important in order to document your claim. Although this is the era of electronic communications, the next thing you should do is mail to the IRS a paper tax return with an attached Form 14039 Identity Theft Affidavit and the police report. According to the IRS, this will shave an average of 54 days off the time it takes the IRS to process your claim. Your case will then be assigned to an IRS employee to assist you with clearing your name and getting your refund. As a victim of identity theft, you also are eligible to receive an Identity Protection Personal Identification Number (IP PIN) to use for future income tax returns to protect you from becoming a victim again of income tax identity theft. You also should put a credit freeze on your credit report because if someone is able to file an income tax return on your behalf, they have access to your Social Security number which they could also use to access your credit report and obtain credit in your name. Putting a credit freeze on your credit report will thwart future attempts by an identity thief to access your credit. You can find information about credit freezes and how to put one on your credit reports at Experian, Equifax and Transunion by going to the Archives section of Scamicide.