Learn About Reporting Identity Theft to the IRS

Understanding Identity Theft and Tax Returns

Identity theft occurs when someone uses your personal information without permission to commit fraud or other crimes. When it comes to taxes, identity theft happens when a criminal files a tax return using your Social Security number to claim a refund. This is one of the fastest-growing types of identity theft reported to the IRS.

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The IRS processes millions of tax returns each year, and criminals know that tax refunds move quickly. A thief may file a fraudulent return in your name before you file your own legitimate return. When you attempt to file your actual return, the IRS system flags it as a duplicate filing and rejects it. This creates a complex situation that requires specific steps to resolve.

Signs that your identity may have been stolen for tax purposes include receiving a tax transcript you didn't request, getting a notice from the IRS about a return you didn't file, or being told your Social Security number is already associated with a filed return. You might also notice fraudulent charges on your credit report or receive bills for accounts you never opened.

The good news is that you are not responsible for paying taxes on income from fraudulent returns filed in your name. The IRS has established procedures to help victims resolve this situation. Understanding how identity theft works in the tax system is the first step toward taking action.

Practical takeaway: If you suspect your identity has been used to file a fraudulent tax return, gather any IRS notices, tax transcripts, and documentation of the suspicious activity. Keep these documents organized as you work through the reporting process.

How to Detect Tax Identity Theft

Detection is critical because the sooner you discover tax identity theft, the sooner you can report it and prevent further damage. Many people discover the problem when they try to file their own tax return and receive an error message stating that a return has already been filed using their Social Security number.

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The IRS sends notices for various reasons, and some of these notices indicate identity theft. If you receive an IRS notice about a return you don't recognize, don't ignore it. Common notices include CP01H (return filed under your name), CP01G (return already filed), or notices about income you didn't earn. The IRS also sends notices about refunds or payments related to returns you didn't submit.

You can obtain your tax transcript directly from the IRS to review filing history. A tax transcript shows returns that have been filed under your name, reported income, and tax payments. By checking your transcript, you can confirm whether a fraudulent return was filed before you file your own return. You can request transcripts by visiting IRS.gov, calling the IRS, or mailing a request.

Credit monitoring is another detection tool. If someone has stolen your identity, they may have opened credit accounts, taken out loans, or made charges in your name. Reviewing your credit report through the three major credit bureaus (Equifax, Experian, and TransUnion) may reveal accounts or inquiries you don't recognize. You are entitled to one free credit report from each bureau annually through AnnualCreditReport.com.

Watch for unexpected tax-related mail, including 1099 forms or W-2 forms reporting income you didn't receive. These documents indicate that someone filed a fraudulent return claiming income in your name. Additionally, if you receive a tax refund that you didn't expect or a refund larger than anticipated, this may signal fraudulent activity.

Practical takeaway: Request your IRS tax transcript and check your credit report at least once per year. These two actions provide concrete evidence of whether your identity has been used fraudulently for tax purposes.

Filing Form 14039 with the IRS

Form 14039, Identity Theft Affidavit, is the primary document you use to report tax identity theft to the IRS. This form tells the IRS that you are the victim of identity theft and that you did not file the fraudulent return. Filing this form is a key step in the resolution process.

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The form asks for your personal information, including your name, Social Security number, date of birth, and mailing address. It also requires information about how you discovered the identity theft, such as receiving an IRS notice or attempting to file your own return. The form includes a section where you describe what happened and when you discovered the fraudulent activity.

You must sign the form under penalty of perjury, which means you are stating that the information is true to the best of your knowledge. This is a legal requirement. If you file the form electronically through IRS.gov, you will use an electronic signature process. If you mail the form, your physical signature is required.

The IRS provides specific instructions with Form 14039. You should read these instructions carefully before completing the form. The instructions explain each field and provide examples of how to complete certain sections. If you need clarification on any part of the form, the IRS website and publications offer additional guidance.

After you file Form 14039, the IRS will review your claim. Processing times vary, but the IRS typically responds within 60 to 120 days. During this period, the IRS may contact you with questions or requests for additional documentation. Keep all communications from the IRS and respond promptly to any inquiries.

If you have already filed your legitimate tax return before discovering the identity theft, include Form 14039 with your return. If you have not yet filed, you may file Form 14039 first and then file your return separately. The IRS will coordinate these filings and ensure that your legitimate return is processed correctly.

Practical takeaway: Obtain Form 14039 from IRS.gov, complete it accurately with all requested information, and submit it along with any supporting documentation. Keep a copy for your records and note the date you submitted it.

Supporting Documentation and Evidence

Filing Form 14039 is more effective when you provide supporting documents that prove identity theft occurred. While the form itself is the primary report, evidence strengthens your claim and helps the IRS resolve your case faster.

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IRS notices are valuable documentation. If you received notices about a return you didn't file, keep copies of these notices. The notice number, date received, and content all help establish the timeline of the fraudulent activity. Some notices specifically mention identity theft or duplicate filing, which directly supports your claim.

Your tax transcript serves as proof of the fraudulent return. The transcript shows the filing date, reported income, and other details about the return filed in your name. By comparing this with your own records, you can demonstrate discrepancies. For example, if the fraudulent return shows income from an employer where you never worked, this discrepancy supports your identity theft claim.

Police reports provide official documentation of the crime. You can file a police report with your local police department or with the Federal Trade Commission (FTC). The FTC operates IdentityTheft.gov, where you can file a report online. This report generates an Identity Theft Report that you can use in your communications with the IRS and creditors. A police report or FTC Identity Theft Report strengthens your position and shows that you have taken official action.

Personal financial records are also useful. Bank statements, pay stubs, and W-2 forms you received from your employers show your actual income and financial activity. If the fraudulent return claims income significantly different from what you actually earned, these documents prove the discrepancy.

Correspondence from the IRS about the fraudulent return, letters to creditors, or communications with credit bureaus all demonstrate your efforts to resolve the situation. Keep copies of everything you send and receive related to the identity theft.

Practical takeaway: Compile a folder containing your IRS notices, tax transcripts, police or FTC Identity Theft Report, and personal financial records. Include copies of all correspondence you send to the IRS. Organize these documents chronologically for easy reference.

The IRS Resolution Process

After you report identity theft to the IRS using Form 14039, the IRS begins a structured resolution process. Understanding this process helps you know what to expect and how long resolution may take.

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The IRS first reviews your affidavit and supporting documents. An IRS employee examines your claim to determine whether identity theft likely occurred. This review typically takes 30 to 60 days, though complex cases may take longer. During this time, the IRS may contact you if they need additional information.

If the IRS