How To Detect Tax Fraud

While identity thieves are best known for maxing out credit cards, they have other schemes too. Sometimes, they use your identity to get healthcare or sign up for cell phone or cable service. In other cases, they can intercept your tax refund or file a fraudulent return in your name to get a refund sent to them, leaving you with a looming tax problem.

Missing Refund Check
One telltale sign that you have been the victim of tax fraud is if you file your return on time, and accurately, and don’t receive your refund check. This could be an indication that the Internal Revenue Service has already gotten a fraudulent return from the identity thief. It also could be a sign that the identity thief engaged in other types of fraudulent activity that put a red flag on your account, leading the Internal Revenue Service to send your refund to another agency to pay off a debt that an identity thief ran up.

IRS Notices
If you receive a notice from the IRS, read it carefully. If the IRS is telling you of a problem with a return that you didn’t file, it could be an indication that someone filed a return in your name. The IRS might also send a notice that you reported information on earnings that didn’t match the W-2 or 1099 forms that the IRS received. This could indicate that someone made up information or filed a return in your name without having access to your forms. Remember that the IRS contacts people by mail, so a phone call or an email that claims to be from the IRS could be fraudulent. Be wary of any communication other than certified postal mail that notifies you of such activity. Emails or phone calls stating that there was an issue with your refund could be a phishing scam.

Dealing with Tax Fraud
If you have any reason to think that you are the victim of tax fraud, the IRS will work with you. You can call the IRS’s Identity Protection Specialized Unit at 800-908-4490. You will need to fill out Form 14039, an Identity Theft Affidavit, if you think that you were a victim of identity theft that affected or could affect your taxes.

Detecting Identity Theft
Discovering fraudulent tax activity is one of many ways you can discover identity theft in your name. Checking your credit report on a regular basis can reveal new accounts that you didn’t open, or inquiries that you didn’t place on your account. It’s also a good idea to regularly review your bank and credit card statements for unauthorized or unfamiliar account activity.


About the Author  
Solomon Poretsky has been a writer since 1996, with experience in the fields of financial services, real estate and technology. Poretsky holds a Bachelor of Arts in political science from Columbia University.