Handling Identity Theft-Related Tax Returns: Steps to Recover Your Refund

Quick summary

A stolen Social Security number or other personal data can let a fraudster file a tax return and claim your refund before you do. The recovery pathway centers on (1) documenting the fraud with the Federal Trade Commission; (2) notifying and working with the IRS; and (3) securing your credit and tax accounts so future filings are protected. Expect a process measured in weeks to months; in complex cases it can take longer.

Step-by-step recovery plan (practical, ordered)

1. Confirm the fraud

• Look for IRS notices like “We Received More Than One Tax Return” or a rejected e-file because a return already exists under your Social Security number. Also check for Letter 5071C (identity verification) or other suspicious IRS mail. If you see that, save the letter and don’t ignore it (see the IRS guide linked below).

1. File a report with the FTC immediately

• Go to IdentityTheft.gov and use the recovery plan tool. Filing this report creates a recovery affidavit and a printed action plan you can use to file police reports or provide proof to banks and the IRS (FTC: IdentityTheft.gov).

1. Contact the IRS Identity Theft Hotline and follow IRS instructions

• Call the IRS Identity Theft Hotline at 1-800-908-4490 (updated contact as of 2025). The IRS may instruct you to complete Form 14039 (Identity Theft Affidavit) and mail it with supporting documents. The IRS’s Taxpayer Guide to Identity Theft explains how the agency responds and what documentation they may request (IRS: Taxpayer Guide to Identity Theft).

1. Complete and submit Form 14039 if required

• Form 14039 is the formal affidavit used by the IRS when someone misuses your SSN to file a return. Follow IRS instructions about attachments (a copy of a government-issued ID, a copy of the FTC Identity Theft report, and any IRS letters you received).

1. Protect your credit and accounts

• Place a free credit freeze with Equifax, Experian, and TransUnion. A freeze prevents new credit accounts being opened in your name (see our page comparing a credit freeze vs. a credit lock for differences).
• Consider placing an extended fraud alert or ongoing monitoring if you prefer not to freeze.

1. Request an IP PIN or enrollment in IRS protection programs

• The IRS offers an Identity Protection PIN (IP PIN) program that provides a six-digit number required on future returns to verify the taxpayer’s identity. If eligible, apply for an IP PIN through the IRS website. Our deeper guide explains the IP PIN process and eligibility.

1. File your correct return or respond to IRS notices

• If your own filing was rejected because a return already exists, follow IRS instructions. You may be asked to file a paper return with the Form 14039 attached, or the IRS will prepare a paper return on your behalf for review. If you received an IRS notice alleging unreported wages or income, assemble W-2s and 1099s to dispute the items (see our article on responding to wage reporting discrepancies).

1. Follow up in writing and keep meticulous records

• Document all calls: date, time, representative name, and case/trace numbers. Keep copies of mailed forms (with tracking when possible). Use the FTC recovery plan and IRS correspondence as anchors in any disputes with credit bureaus, banks, or state tax agencies.

1. Monitor until the issue is fully resolved

• Expect several months for the IRS to clear the fraudulent return and issue any legitimate refund. Continue monitoring your credit reports and bank accounts for new suspicious activity.

What documents the IRS commonly requests

• Copy of government-issued photo ID (driver’s license or passport)
• Copy of Social Security card or SSA document
• Copy of the FTC Identity Theft report from IdentityTheft.gov
• Copies of IRS notices and any relevant tax returns
• If you were a victim of tax-related identity theft in prior tax years, the IRS may request additional documentation for those years.

Typical timelines and what to expect

• Initial IRS acknowledgement: weeks. The IRS usually flags identity theft cases and assigns them for manual review.
• Case resolution and refund issuance: weeks to several months. Most straightforward cases resolve within a few months; complex or cross-jurisdictional frauds can take longer.
• Note: timelines vary by IRS workload, the completeness of your submission, and whether additional verification is needed.

How I handle this in practice (professional tips)

• File early: filing as soon as you have documents reduces the risk someone else will beat you to filing with your SSN.
• Use paper support when required: when the IRS requests a paper return with attachments (Form 14039, IDs), follow their exact mailing instructions — online e-file is often not possible for that submission.
• Maintain a forensic folder: create a single folder (digital and paper) for all identity-theft documents, phone logs, letters, and tracking numbers. This saves time if you need to escalate.
• Be proactive with employers: if fraudulent wages are being reported under your SSN, get a corrected W-2 from the employer when possible and deliver it to the IRS with your response.

Common pitfalls and how to avoid them

• Mistake: Only reporting to one agency. Remedy: report to the FTC, the IRS, credit bureaus, and any affected state tax agencies.
• Mistake: Throwing away IRS letters. Remedy: keep all IRS correspondence and use it when completing Form 14039.
• Mistake: Falling for collection scams after identity theft. Remedy: verify IRS contact through official websites and don’t give personal info in response to aggressive unsolicited calls. The IRS will send official notices in the mail first.

When to escalate to a tax professional or attorney

• If the IRS won’t clear the fraudulent return after you’ve followed steps and contacted the Identity Theft Hotline.
• If the fraud involves multiple tax years, business EINs, or tax liens placed in error.
• If you face identity theft tied to criminal activity or ongoing financial loss—attorneys or forensic accountants can help navigate complex recovery and potential litigation.

Useful links and authoritative sources

• IRS — Taxpayer Guide to Identity Theft: https://www.irs.gov/newsroom/taxpayer-guide-to-identity-theft
• Federal Trade Commission — IdentityTheft.gov: https://www.identitytheft.gov
• IRS IP PIN program: https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin

Internal FinHelp.io guides (for next steps)

• Learn more about the IRS Identity Protection PIN: IRS Identity Theft Protection PIN
• How the IRS handles identity theft and the agency’s initiatives: How Does the IRS Handle Identity Theft?
• If you received an identity verification letter from the IRS, see: How to Respond to an IRS Identity Verification Letter (Letter 5071C)

Short FAQ

Q: Can the IRS reverse a fraudulent refund already paid to a thief?
A: The IRS does attempt to recover funds paid fraudulently, but recovery depends on tracing funds and coordination with financial institutions. Your best immediate step is to report the fraud and submit Form 14039.

Q: Will filing a police report help?
A: Yes. A police report supports disputes with banks and credit bureaus and may be required by some institutions.

Q: Should I close bank accounts after tax-related identity theft?
A: If you see unauthorized withdrawals or accounts opened in your name, close those accounts and open new ones with new credentials. Notify your bank that you are an identity-theft victim so they can apply additional protections.

Final tips and professional disclaimer

Act immediately but methodically: the faster you report and supply complete documentation, the faster the IRS can clear fraudulent returns and restore your refund. In my practice as a CPA and CFP, clients who document each step and respond quickly often reach resolution in fewer months than those who delay.

This article is educational and not a substitute for personalized legal or tax advice. If your case is complex, consult a tax professional or attorney experienced in identity-theft tax matters. For official instructions and forms, consult the IRS and FTC pages linked above.