How to Handle Identity Theft on Your Tax Account

Immediate steps to take (first 24–48 hours)

1. Don’t ignore IRS notices or unexpected tax changes. If you receive a letter or notice claiming a return was filed, a balance is due, or income is different than you reported, treat it as a high-priority signal of possible tax-related identity theft.

2. Report the fraud to the IRS. File Form 14039, Identity Theft Affidavit, if you believe someone used your information to commit tax fraud. The IRS Identity Theft Central pages explain when to use Form 14039 and what documentation may be helpful (see IRS Identity Theft Central). Filing Form 14039 begins the IRS’ identity-protection process and can help stop additional fraudulent filings.

3. File an identity-theft report with the Federal Trade Commission at IdentityTheft.gov. The FTC generates a recovery plan and an identity-theft report you can use with creditors and the IRS (FTC / IdentityTheft.gov).

4. Place a fraud alert or credit freeze. Contact one of the three nationwide credit bureaus (Experian, Equifax, TransUnion) to request a fraud alert or credit freeze. A fraud alert makes it harder for new accounts to be opened in your name; a freeze is stronger and prevents most new accounts entirely.

5. Check your tax account and recent transcripts. Create or log into your IRS account (or request a transcript) to see recent filings and notices. Keep screenshots and save any correspondence.

6. Gather documentation. Collect copies of your photo ID, Social Security card, any IRS notices, proof of address, and prior tax returns. These will be essential when you contact the IRS, a tax professional, or law enforcement.

Contacting the IRS and what to expect

• Start at IRS Identity Theft Central (IRS.gov) for up-to-date instructions. The IRS will instruct you how to proceed, which may include submitting Form 14039, mailing requested documents, or visiting an IRS Identity Protection Specialized Unit if recommended. The agency may assign an Identity Protection PIN (IP PIN) to eligible victims or advise you how to apply for one. The IP PIN is a six-digit number that helps prevent someone else from filing a tax return in your name.

• If the IRS requests additional verification, respond quickly and keep copies of everything you send. Resolution often takes several months. If a fraudulent return was filed and processed, expect the IRS to open an investigation and explain the steps they are taking.

• If you receive an identity verification letter (for example, Letter 5071C or other verification notices), follow the instructions exactly. For practical guidance on handling verification letters, see this FinHelp guide: Responding to an IRS Identity Verification Request: Steps to Resolve Quickly (internal resource).

Reporting to other agencies and law enforcement

• File a police report with your local law enforcement agency. Bring copies of your FTC identity-theft report, IRS notices, and any proof of fraudulent activity. A police report can help with financial institutions and certain IRS processes.

• Keep a record of all calls, letters, and emails. Note dates, names, contact details, and what was discussed. Well-documented communication speeds recovery and helps if you need to request abatement of penalties later.

Repairing credit and financial accounts

• Review your credit reports from AnnualCreditReport.com and dispute any fraudulent accounts or inquiries. Use the FTC report and police report when disputing accounts with creditors and bureaus.

• Close or freeze accounts that show suspicious activity. Replace compromised cards and change passwords immediately for online financial accounts.

• Monitor your bank and retirement accounts for unauthorized transfers. Consider signing up for credit monitoring and alerts while you recover.

How tax resolution typically proceeds

• If a fraudulent return was filed and the IRS denies your refund or flags a duplicate filing, the IRS opens an identity-theft case. You may be instructed to file your legitimate return on paper, include a Form 14039, and attach copies of identity documents.

• The IRS may issue an Identity Protection PIN (IP PIN) to prevent future abuse. You can also proactively apply for an IP PIN if eligible; this step makes it much harder for thieves to file using your SSN (see FinHelp’s overview on IRS Identity Theft Protection PIN).

• Penalty relief: If identity theft caused late filing, underpayment, or inaccurate returns, you may qualify for penalty abatement after you’ve established the fraud and cooperated with the IRS. Keep all evidence and correspondence; a tax professional can help request relief where appropriate.

Prevention and hardening your tax profile

• File early. Filing your tax return as soon as you have the necessary documents reduces the window for fraudsters to file a return in your name.

• Use strong authentication. Sign up for an IRS online account with multi-factor authentication and add security to your tax software providers. Use unique passwords and a reputable password manager.

• Protect your Social Security number. Share your SSN only when legally required. Shred documents that contain your SSN and avoid sending it over email or text.

• Keep devices and software up to date. Malware and phishing remain common ways thieves grab tax credentials. Use antivirus software, update operating systems, and be cautious clicking links in unsolicited emails.

Special situations: employers, dependents, and past years

• Employers: If a thief files using a stolen SSN but lists a false employer, your W-2 reporting can appear incorrect. Keep copies of your W-2 and verify with your employer if you see discrepancies.

• Dependents: Children and other dependents are frequent victims because they have unused or clean SSNs. If a dependent’s SSN is used, you’ll likely need to file Form 14039 and follow the same steps to protect future filings.

• Past-year fraud: If someone filed a fraudulent return for prior years, you’ll need to alert the IRS for each affected year and follow their instructions. The IRS may request additional forms or documentation.

Practical timeline and expectations

• Immediate actions (24–48 hours): Report to FTC, file Form 14039 if directed, place credit freeze/alert, collect documents.

• Short term (weeks): IRS opens a case, requests documentation, and may block suspicious filings. You may need to file returns on paper and wait for manual processing.

• Medium term (months): IRS investigations can take several months for final resolution. Refunds may be delayed until the case is closed.

• Long term (ongoing): Monitor credit, maintain IP PIN if issued, and review return filings each year.

When to get professional help

If the case is complex — multiple years affected, large tax liabilities, or evidence of wider financial fraud — consult a qualified tax professional or identity-theft specialist. They can help prepare documentation, communicate with the IRS on your behalf, and request penalty abatement where applicable. Remember that tax professionals may charge for these services; weigh the cost against the complexity and your comfort level.

Useful resources and internal reading

• IRS Identity Theft Central (IRS.gov) — for guidance on Form 14039, IP PINs, and IRS procedures.
• FTC / IdentityTheft.gov — to create an identity-theft report and follow a recovery plan.
• Credit bureaus and AnnualCreditReport.com — to review and dispute credit history.

Internal FinHelp resources:

• Recovering from Tax-Related Identity Theft: Immediate Actions to Take — https://finhelp.io/glossary/recovering-from-tax-related-identity-theft-immediate-actions-to-take/
• IRS Identity Theft Protection PIN — https://finhelp.io/glossary/irs-identity-theft-protection-pin/
• Responding to an IRS Identity Verification Request: Steps to Resolve Quickly — https://finhelp.io/glossary/responding-to-an-irs-identity-verification-request-steps-to-resolve-quickly/

Common mistakes to avoid

• Waiting to act. Delay gives thieves time to claim refunds or create additional problems.

• Suppressing documentation. The IRS and other agencies will require clear documentation; withholding records slows resolution.

• Relying solely on credit monitoring. Monitoring helps detect issues but does not stop fraud — combine monitoring with freezes, IP PINs, and secure behaviors.

Final notes and disclaimer

Tax-related identity theft is stressful but manageable with prompt action, thorough documentation, and the right contacts. The steps above reflect current IRS and FTC guidance as of 2025 and my professional experience assisting clients through identity-theft cases. This article is educational and not a substitute for personalized legal or tax advice. If you suspect you are a victim, contact the IRS, FTC, and a qualified tax professional to begin recovery.