Your Tax Refund Has Been Stolen, Now What?

March 30, 2018

If you're reading this, we hope that you've filed your tax return on time this year and that you're going to receive a nice refund check from the IRS.

We also hope that you're not one of the growing number of Americans who are being cheated out of their refund checks by fraudsters who specialize in identity theft.

If you are, you'll know it when you receive a letter from the IRS rejecting your tax forms because they've already been filed. In other words, someone else has filed in your name.

If you've received a notice from the IRS stating that more than one return has been filed in your name, or if you believe your identity has been used fraudulently, Money magazine recommends that you:

Report the fraud quickly
You can start by calling the IRS Identity Protection Specialized Unit at 800-908-4490. They will ask you to also fill out an identity theft affidavit, known as Form 14039. Once you've filed that, the IRS can put an alert on your account.

After that you should receive an identity protection personal identification number - essentially a PIN number that you can use along with your Social Security number on future tax returns.

It's also a good idea to file a report with the police, as someone may have simply stolen your check from your mailbox.

If you live in the tax fraud hotbeds of Florida, Georgia, and D.C., you can apply for a PIN without having been an ID theft victim, thanks to a new IRS initiative. To get the six-digit number, you need to register and verify your identity online. You can sign up on the IRS website.

Gather evidence
It's a good idea to gather up all of your files if you have to report the theft of your tax refund to the IRS. It's recommended that you have copies of your tax returns dating back for about three years when you contact the IRS, to help get your case moving faster.

You should also file a theft report with the local police or sheriff's office.

You should also have at the ready your driver's license, birth certificate, passport, two recent utility bills and your marriage certificate if you're married. The IRS will likely ask you to make copies of these documents as well as the police report, so the agency can get to work on verifying your real return and determining if the other one was fake.

Notify credit bureaus
If someone has cloned your identity enough to steal your tax refund check, they may also have enough information to also open new credit accounts in your name. That's why your next step should be to set up fraud alerts with the three major credit reporting bureaus: Equifax, Experian and TransUnion.

The alerts warn potential creditors or lenders that you have been the victim of identity theft and that they have to verify your identity before issuing you credit. This is another reason to file a police report.

Fraud alerts, which are free, expire after 90 days. After that, if you feel it's warranted, you can set up an additional alert.

If you are really concerned, you can place a credit freeze on your credit history, which will prohibit creditors from accessing your history and thus denying any new credit applications. That's free with a police report, and usually about $10 without one.

Check your credit report
You should also ask each of the three credit agencies for a copy of your credit report so that you can see if anyone has opened any new account in your name. The agencies offer these free once a year, so take advantage of it.

If you see errors in the history, you should dispute the accounts with the credit history agency and also notify the creditor that you didn't open the account.

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