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Posted: 6:00 a.m. Tuesday, April 15, 2014

How To Deal With Tax Return Identity Theft

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By Jacque Fidel

ClarkHoward.com

 

Tax fraud and tax return identity theft is becoming more common every day. It's even hit several of Clark's Consumer Action Center volunteers. Here's how one of them took care of it.

"Reject Codes IND-508. Primary SSN in the Return Header must not be equal to the Spouse SSN on another tax return for which filing status is Married Filing Jointly or (filing status is Married Filing Separately and the Spouse exemption is claimed). "

That is the notice that our accountant received when he attempted to file our income tax return last year.  It was the first hint that my husband and I had become victims of identity theft.

This was also a relatively new experience for our accountant so there was no process that we knew of to navigate the situation.  The only thing we were certain of was that our return was due on time, regardless of the circumstances.  Because the IRS already had a tax return filed for one of us, we no longer had the option to file electronically.  Since we tend to file close to the deadline - and it was looming, we had to move quickly.  So I let myself panic a bit, then pulled out a file folder and we got started.

Our accountant immediately contacted the local IRS office.  The very first thing  he was told was that identity theft cases took a minimum of 180 days to resolve.  We were assigned a PIN number to use to file our future returns.

Both my husband and I had to complete an Identity Theft Affidavit - IRS Form 14039.

Due to the convoluted nature of our rejection notice, we were not clear which Social Security number had been used to file the fraudulent return.  The IRS could (or would) not give us a definitive answer to that question, so we proceeded under the assumption that both of our Social Security numbers had been compromised and completed two Identity Theft Affidavit forms (one for each of our Social Security numbers).

Then we mailed the affidavits and our paper tax return, along with copies of our driver's licenses and Social Security cards, to the IRS office.

We also pulled our credit reports from AnnualCreditReport.com. This is something we do every year, so fortunately there were no surprises.

We filed a fraud alert and put a temporary freeze with all three credit bureaus, during which time we filed a police report.  The officer tried very hard to discourage us from filing an identity theft report.  We had to be bold and insist that he file one for both of us.  Once the report was ready the following week, we were able to put a more lengthy freeze on our credit without charge.

We also contacted the IRS Identity Protection Specialized Unit at 800-908-4490.  We were referred to the Taxpayer Guide to Identity Theft at IRS.gov and encouraged to contact the Social Security Administration and to also file a report with the FTC at www.consumer.gov/idtheft (877-438-4338).

After hearing nothing for nearly three months, I contacted the IRS Taxpayer Advocate Service at 877-777-4778 hoping to speed things up a bit.  This is also the number to call if you are experiencing economic harm or have been unable to get a proper resolution.

The advocate was very helpful and it was during this call that I learned that the IRS had made a determination of identity theft/fraud in our case.   It wasn't until we finally received a resolution letter from the IRS several weeks later confirming identity theft that we were able to breathe a sigh of relief.

Jacque Fidel is a volunteer at Team Clark Howard's Consumer Action Center.

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