Tax refund fraud: How a victim can get the money back and avoid tax debt

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By: Sanders Patricia
on 16th Apr,2015

8 billion was paid in stolen tax refund by the IRS in 2013.
Tax refund fraud: How a victim can get the money back and avoid tax debt

According to the report of GAO (General Accountability Office), $5.8 billion was paid in stolen tax refund by the IRS in 2013. Yes! hackers are randomly using stolen information to file false tax return in your name. This is called “stolen identity refund fraud”. Not only you, there are many people who are realizing that someone has stolen their identity to get the tax refund. Unfortunately, with the help of electronic filing, the scammer can file the fraudulent tax return more quickly. The situation becomes worse when you owe huge tax debts due to this tax identity theft. Here in this article you can find all the remedy of your problems. These are:

  1. What are the sighs of tax refund identity theft?
  2. What will be your next step if you find a false tax return filed in your name ?
  3. How can you pay off tax debts?

Signs of a tax refund identity theft

According to the IRS, receiving any of this below mentioned notice signify that you're a victim of tax refund fraud.

  • If you find another tax return was already filed using your SSN.
  • If IRS claims that you received wages from an unknown employer.
  • If you owe extra tax or tax refund for a previous year which you've never filed before.

7 Effective steps through which a victim can get the tax refund back

In order to save your tax refund, you need to take some actions such as:

1. Review your refund

The first step to prevent tax refund scams is to track refund information. You can get up-to-date tax refund information at Search with “Where's My Refund” in the website. You'll get updated information every 24 hours. You can also use mobile app IRS2Go. Your E-filing can be tracked within 14 hours of filing. Get mobile app and track if the information is correct. These type of services will protect your information. Your taxpayer ID , SSN, filing status and refund amount will help to track refund.

2. Report the scam as early as possible

You need to call the IRS Identity Protection Specialized Unit at 800-908-4490 as soon as possible. This helps the IRS to take actions against the fraud fast. Fill out the Form 14039 or an identity theft affidavit form. Thus, the IRS can set an alert option on your account. If you're a victim of false tax return filing, then contact state revenue agency for further action.

3. Report the police

You need to inform your tax refund fraud to the police. Because government agencies and credit bureaus may ask for the official fraud report to start action against the fraud.

4. Collect all the documents as proof

You need to show the copies of your previous tax returns to the IRS. Thus, the IRS will understand that you're an authentic tax filer and can solve your case faster. Try to gather all important documents including driver's licence, birth certificate, passport, recent utility bills, marriage certificate, etc. Mail all the copies of your documents to the IRS along with the copy of police report. This will also help IRS to verify your tax return filing as well.

5. Inform the credit bureaus

You can also set up fraud alerts with the three major credit reporting bureaus. It is free and stay for 90 days. You can renew after 90 days are over. The alert can give signals to the creditors and lenders that your identity has been stolen. So, they must check your identity before sending credit. You can also freeze your credit.

6. Review credit reports

You should also review your credit reports from time to time in order to check with the listings. If you are able to find out that there are any kinds of wrong charges listed on your credit report, you should immediately take actions to resolve the case with the creditor. Dispute the errors with the 3 credit bureaus and fraud department of the business.

7. Change access details frequently

Try to change all the usernames and passwords of your online accounts on regular basis. Make sure the passwords are complicated so that scammers can't assume them.

Consequences of tax identity theft

Tax identity theft is a common problem now, but its effect is very ruinous. Because, budget are limited to solve this growing fraud. So it takes time to resolve the issues. According to the IRS,

“Identity theft can impose a significant burden on its victims, whose legitimate refund claims are blocked and who often must spend months or longer trying to convince the IRS that they are, in fact, victims and then working with the IRS to untangle their account problems”.

Below are some bad effects of tax identity theft

  • If your identity has been stolen, then it delays your legitimate tax refund.
  • The IRS may hold the suspicious refunds and the whole process of refund may take long time.
  • The longer you wait for refund the more chances of falling in debts.
  • You may lose job opportunities and get rejection for loan, house, car, education, and so on.

How you can disappear tax debts

There are many people who face problems in making the payments against their taxes due to tax refund fraud. Thus, they end up in tax debt. So, if you're one of them having the same problems, then you need to find out tax debt pay off options . Because no one wants to fall in debts even after filing for tax in right time in right way. So, if you give priority to a financial security, then you have to take action to pay off your tax debt.

The tax debt pay off options

There are various kinds of tax debt pay off options that you can take advantage of and these are:

1. The instalment agreement

In case of the instalment agreement, you need to make monthly payments (instalment) against the back taxes. This will help you in paying off IRS tax debt. The different instalment agreements are:

  • Non-streamlined
  • Partial payment
  • Guaranteed
  • Streamlined

2. Offer in Compromise

In case of offer in compromise or OIC, you aren't required to pay the tax amount in full to the IRS. The IRS provides you with the option to settle the tax debt amount. There are various terms and conditions to which you may have to agree before the IRS agrees to take the payments through OIC. Failing to stick to the terms and conditions can make the IRS revoke the terms of your OIC.

3. Currently not collectible plan

You aren't required to pay the back taxes for some time. This is considered to be one of the debt relief options which is really helpful in case you don't have cash in hand to handle the tax payments along with other expenses. However, you are supposed to pay off the debt after a certain period of time.

Final words

Above all, you need to be very careful at the time of filing tax return. Because, your identity can even be stolen if you lose your purse with your credit and debit cards, SSN, lose your mobile phone with bank account and email id details. You can also lose your identity to an online thief through Facebook or any such social networking sites where you have mentioned about your finances and so on. So, if you're a responsible taxpayer, then it is also your duty to protect your personal information or identity carefully. Thus, you can avoid the vicious tax debt trap and see a good amount of tax refund in your account as well.

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