Just when you thought the financial problems tied to the Coronavirus pandemic were lessened a bit by the federal government’s program of payments of up to $1,200 to eligible people, we are now seeing a double whammy of increases in income tax identity theft resulting in not only the needy person not getting their $1,200 payment, but also having their legitimate income tax refund delayed by months. This was what happened recently to Jim and Dawn Ackerman of Illinois who were expecting $1,200 stimulus checks, but instead not only discovered that their checks had been paid to someone else, but also found out that they were victims of income tax identity theft where an identity thief had filed a phony income tax return in their names so that when the Ackermans recently filed their 2019 federal income tax return, they were told by the IRS that they cannot obtain their legitimate income tax refund until a full investigation of their case has occurred which will most likely take many months.
The reason for the plight of the Ackermans and others in their situation is that the payments under the CARES Act are determined in the vast majority of instances by the information contained on your 2019 income tax return or if you have not filed a 2019 income tax return yet, by your 2018 income tax return. These tax returns will be used to determine both the amount of the stimulus check that you shall receive as well as to where the stimulus payment will be made. Income tax identity theft causes taxpayers to lose billions of dollars each year and it can be expected that that the problem will worsen this year.
In addition to protecting the privacy of your Social Security number, the best thing you can do to protect yourself from becoming a victim of income tax identity theft is to file your income tax return as early as possible. A criminal can successfully make you a victim of income tax identity theft only if he or she files an income tax return using your Social Security number before you file your legitimate income tax return. Therefore the earlier you file your income tax return, the more likely you are to avoid becoming a victim of this crime. Although, due to the Coronavirus pandemic, the IRS has extended the filing deadline for 2019 income tax returns to July, you would be well advised to file your income tax return as soon as possible if you have not already done so in order to avoid the problem encountered by the Ackermans.
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 over previous years, however with reduced staffing and more to do, the delays in processing claims of income tax identity theft victims may be longer this year. 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. You can obtain the form at the FTC’s http://www.Identitytheft.gov 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 http://www.Identitytheft.gov 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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