The General Accountability Office (GA0), the federal agency which does detailed investigations of governmental activities, has just issued a new report critical of the IRS’ efforts to authenticate taxpayers and prevent income tax identity theft. Income tax identity theft, by which identity thieves file phony income tax returns with counterfeit W-2s using the Social Security number and name of their victims is still a major problem for the IRS and taxpayers costing us all billions of dollars each year.  While the situation has improved from a few years ago, income tax identity theft still costs the government billions of dollars and tremendously inconveniences the individual taxpayers whose identities are stolen and used to file phony income tax returns. In addition, with the major data breaches that have occurred in the last year including the major Equifax data breach, more and more personal information that can be used to file a phony income tax return is in the hands of scammers. In its report the GAO made eleven specific recommendations to the IRS for help prevent income tax identity theft.
While, the IRS continues to fight income tax identity theft, we all must do our part to protect ourselves from becoming victims of income tax identity theft.  It can take a long time to get your legitimate refund if you become a victim of income tax identity theft.
Along with protecting the privacy of your Social Security number as much as possible, the best thing you can do to protect yourself from income tax identity theft is to file your income tax return as soon as possible in order to make sure your return is filed prior to that of an identity thief.  Income tax identity theft only works if the identity thief files a tax return before you do.
If you do find yourself a victim of income tax identity theft, you should file a police report immediately and then file a paper tax return with an attached Form 14039 Identity Theft Affidavit along with a copy of the police report to the IRS to hasten the process of recovering your tax refund.
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