Don't ignore tax identity theft letters from IRS

11 months ago 205

Getting a notice from the Internal Revenue Service is rarely welcome. But such correspondence could be a tax and financial lifesaver when it's about possible tax identity theft.

Over the years, the IRS has made progress in reducing tax ID theft, largely because the tax agency scans every tax return for signs of fraud. If the automated system finds a suspicious tax return, the IRS reviews the filing and sends a letter to the taxpayer letting them know about the potential ID theft.

The IRS won't process the suspicious tax return until it gets a response from the taxpayer.

Here are four identity fraud letters you hope you won't ever get, but which the IRS says to pay attention to if one does arrive in your U.S. Postal Service box.

Letter 5071C, Potential Identity Theft with Online Option — This letter tells the taxpayer to use an online tool to verify their identity and tax return information. If the taxpayer didn't file, they can let the IRS know with the online tool.

Letter 4883C, Potential Identity Theft — This letter instructs the taxpayer to call the IRS to verify their identity and tax return information. If the taxpayer didn't file, they can call the Taxpayer Protection Program hotline number on the letter.

Letter 5747C, Potential Identity Theft In Person Appointment — This tells the taxpayer to verify their identity and tax return information in person at a local Taxpayer Assistance Center. If the taxpayer didn't file, they can call the Taxpayer Protection Program hotline number on the letter.

Letter 5447C, Potential Identity Theft Outside the U.S. — This tells the taxpayer to use an online tool or to call the IRS to verify their identity and tax return information. If the taxpayer didn't file, they can let the IRS know with the online tool.

Each of these four letters is for slightly different Form 1040 filing situations. Each also has specific steps the affected taxpayer needs to take as soon as possible. You can click on the links for details.

Stolen Social Security numbers: The letters, however, do have one thing in common. The taxpayers' tax ID numbers were used on the returns that the IRS flagged.

The web page for each alert tells the letter-receiving taxpayers that —

"We received a federal income tax return, Form 1040-series, filed under your Social Security number (SSN) or individual tax identification number (ITIN). We need you to verify your identity and your tax return so we can continue processing it."

Stealing Social Security numbers, either through scams or hacking databases, are a key way crooks take over individuals' lives and finances. Below are some other clues that your identity has been stolen.

Identity Theft Warning Signs

You see withdrawals from your bank account that you can't explain.

You don't get your bills or other mail.

Merchants refuse your checks.

Debt collectors call you about debts that aren't yours.

You find unfamiliar accounts or charges on your credit report.

Medical providers bill you for services you didn't use.

Your health plan rejects your legitimate medical claim because the records show you've reached your benefits limit.

A health plan won't cover you because your medical records show a condition you don't have.

The IRS notifies you that more than one tax return was filed in your name, or that you have income from an employer you don't work for.

You get notice that your information was compromised by a data breach at a company where you do business or have an account.

Source: Federal Trade Commission

More identity theft info: One thing these letter recipients don't need to do is file an identity theft affidavit. This document, Form 14039, is filed only if you suspect or discover you are an identity theft victim before the IRS flags a return filed in your name, using your Social Security number.

If you are an ID theft victim, you can find more on reporting and recovering at Federal Trade Commission's special web page identitytheft.gov.

For tax-specific ID theft, check out the IRS' Identity Theft Central and How IRS ID Theft Victim Assistance works web pages.

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