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.  However, when someone has stolen your Social Security number and filed an income tax return using your name, the problem becomes particularly personal.
In 2015 I reported to you about a report of the Treasury Inspector General for Tax Administration (TIGTA) in which it disclosed that despite IRS assurances to the contrary, it took the IRS an average of 278 days to resolve individual income tax identity theft cases and return the rightfully owed tax refund to the victimized taxpayer.  In a heartening example of some good news, TIGTA now says that the IRS has lowered the time to resolve the income tax identity theft cases of individual taxpayers to 166 days, which, although to my mind, is still too long, is a significant improvement. Recently however, through the joint efforts of the Federal Trade Commission (FTC) and the IRS, you can now file electronically an IRS Form 14039 which is the form necessary to report if you have become a victim of income tax identity theft to the IRS. Being able to file this form now electronically should speed up the process of the IRS investigation of instances of income tax identity theft and reduce the time before you can get your income tax refund if one is due.


This proposed legislation will take a long time to be passed and even once passed will be phased in.  So for now, if you live in one of the three jurisdictions where you are able to obtain an IP PIN, I urge you to do so.  As for the rest of us, 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 become a victim of income tax identity theft, you should file a Form 14039 electronically.  You can obtain the form at the FTC’s website where you will be asked questions necessary to automatically complete the form. Once the form is completed, you will be able to review it and, if it meets with your approval, submit the form directly to the IRS through the website. You should also download and print out a copy of the form for your own records as well. You should receive a confirmation from the IRS of receipt of the form within thirty days.  You  also should file a police report immediately

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