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What to do?

With tax-related identity theft skyrocketing, and over a third of tax returns being filed in the last few weeks of tax season, a huge number of taxpayers can expect to discover soon that someone has stolen their ID and filed a bogus tax return in their name.

The question is, what to do then?

Recovering from ID theft is difficult, but not impossible, according to Trenda Hackett, who spent 15 years as a revenue agent at the IRS and is now a technical editor/author of PPC products for Thomson Reuters Checkpoint – but taxpayers need to get to work right away on implementing the steps she lays out here.

(You can see a text version of this story here.)
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Don’t delay

Whether it’s tax-related or not, as soon as someone suspects that their identity has been stolen, they should start dealing with it. The longer ID thieves have to operate, the more havoc they can wreak.
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Man Controlling Trade statue in front of the Federal Trade Commission Building

Notify the FTC

One of the best-kept secrets about ID theft is this: The first place to go when someone’s ID has been stolen is the Federal Trade Commission to file a report. Start by visiting IdentityTheft.gov.

(And in case you’re wondering about the image – it’s a statue outside the HQ of the FTC in Washington, D.C., called “Man Controlling Trade.”)
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File a police report

Apart from any help local law enforcement may be able to give in tracking down the ID thieves, victims will also want to have a police report (and a report number) for various filings with other agencies.
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Alert the credit agencies

Apart from the tax problems, ID theft can seriously impact the victim’s credit, so it’s important to alert one of the three major credit ratings agencies (Equifax, Experian and TransUnion). Filing an extended fraud alert will make sure they get two free reports a year for seven years; placing a credit or security freeze on their report will make it difficult for ID thieves to open accounts.
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Contact the IRS: The First Time

If the ID theft comes to light through a communication from the Internal Revenue Service, there are a number of ways to proceed. If it’s in a letter than includes a contact number, the taxpayer (or their representative) should call that number and give the requested information.
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Contact the IRS: The Second Time

If they can’t reach the IRS at the number given in the communication (or if there isn’t one), victims should try the ID Protection Specialized Unit at (800) 908-4490.
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Contact the IRS: The Third Time

If they can’t reach the IRS by phone (not an unheard-of thing …), victims may need to file a Form 14039, Identity Theft Affidavit.

A few tips on the Form 14039 from Hackett: It’s only for one taxpayer at a time (married couples will need to file one for each spouse, for instance); it’s not for businesses; and be sure to include an FTC affidavit and a police report.
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When all else fails …

If the victim can’t get any satisfaction from the IRS, they can try reaching out to the Taxpayer Advocate Service, either at the nearest TAS office or by calling (877) 777-4778.
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Request a copy of the fake return

This year, for the first time, victims of tax-related ID theft are able to request a redacted copy of the fraudulent return (provided the victim’s name and Social Security number is listed as the primary or secondary taxpayer). Instructions are available on IRS.gov
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Brace yourself for a long haul

The mills of the gods grind slowly – when it comes to recovering from ID theft, patience is a must, as are organization and a willingness to follow up on bureaucratic minutiae. Good luck!
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