Identity Theft and Your Tax Refund


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The IRS has reported that they started the week with over 5 million unanswered taxpayer letters. They estimate it will take a year to get back to normal operation. That seems unreal but remember they have been operating with a lower level of staffing and there is brand new tax law that hasn’t been fully adopted yet.And it’s now tax season.

In general, don’t expect any quick answers. On the good side, no new audits are scheduled for the short term and ongoing audit requests have been postponed.

The one thing they’re taking very seriously right now, though, is identity theft. One of my clients went through an IRS identity theft IRS issue and this last year, my elderly mother did too.

In the case of my client, their identity was stolen as part of a Home Depot credit card hack. Hundreds of thousands of customers had their identity stolen. One part of the scam was to take the social security numbers, get IRS transcripts to see how much tax had been withheld and then quickly file for refunds with new addresses.

The scammers received the IRS checks and somehow cashed or deposited them.

Then months later when my clients filed their legitimate tax returns, delayed because of their complicated, multiple businesses and real estate investments, the IRS raised a red flag. My clients had to prove they were who they said they were.

And, to this day, each year they file they need to call and confirm who they are with the IRS.

In the case of my mother, a caregiver had stolen her identity and applied for credit in her name and misused her credit card. I’m not sure if the caregiver tried to get a refund on my mother’s tax account, but the IRS wasn’t taking any chances. Since my mother is deaf and now suffers from dementia, I had to call as her POA (power of attorney) and answer a series of questions about places she’d lived, work she’d done years ago and mortgages she’d had. Some of the questions went back decades.

The IRS has stated that they are seeing even more identity theft issues. If there is a problem, you will receive a letter that is sent to your address that they have on record. Most likely, they’ll use the address from your return the year before. Since identity thieves change the address when they apply for your refund, the IRS doesn’t necessarily trust that new address. That means your mail could go missing if you had a legitimate reason for a move and your mail forwarding no longer works.

The IRS will never email. If you receive an email about identity theft and the IRS, don’t believe it. It’s a scam.

The IRS most likely won’t call. If you do get someone who is calling you, don’t give them any information. Have them give YOU information and then call a number back that you know. For example, you may want to call the general information IRS number.

Be careful giving out confidential financial information on the phone when someone calls you, even if they say they’re from the IRS.

If you’re not sure if it’s legit, ask your tax pro.



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