The Taxpayer Protection Program (TPP) is a comprehensive effort by the Internal Revenue Service (IRS) aimed at combating tax-related identity theft, which occurs when criminals use stolen personal information to file false tax returns and claim refunds illegally. This program acts as a critical shield, protecting taxpayers by identifying suspicious tax returns and stopping fraudulent refunds before they reach imposters.
How the Taxpayer Protection Program Works
The TPP functions by analyzing incoming tax returns using advanced data analytics and fraud detection technologies. It looks for unusual patterns, such as a tax return filed from a different location than usual, multiple returns sharing the same bank account information, or inconsistencies in taxpayer data. When the system detects such anomalies, it flags the return for further review.
Once flagged, the IRS reaches out to the taxpayer with verification requests—commonly through letters like the IRS Letter 5071C—to confirm the tax return’s legitimacy. Taxpayers might be asked to verify their identity via a secure online tool or phone call by answering questions only the real taxpayer would know, often involving prior year tax information or financial data.
Collaboration and the Security Summit
The TPP is part of a broader anti-fraud strategy involving collaboration between the IRS, state tax agencies, and private tax industry partners, collectively known as the Security Summit. This coalition shares data and security practices to enhance detection and prevention of identity theft across platforms, helping reduce fraudulent tax filings nationally.
What Happens If You Are Flagged
Receiving a TPP letter does not mean wrongdoing; rather, it indicates the IRS’s protective system detected unusual activity tied to your Social Security number or taxpayer identification number. Failing to respond to the verification request can delay your refund and halt your tax return processing.
By promptly verifying your identity, you enable the IRS to process your legitimate tax return and prevent criminals from hijacking your tax refund.
Real-World Examples
- You attempt to electronically file your tax return but it’s rejected because someone else has already filed a return with your SSN. The TPP is actively investigating and protecting your account.
- You receive a Letter 5071C from the IRS before filing a return, indicating a possible fraudulent filing attempt by an imposter.
- In rare cases, you might receive an unexpected refund due to a fraudster’s error or because the TPP intercepted fraudulent activity.
Who Benefits From the Program
The TPP protects all taxpayers but is especially valuable to individuals who are at higher risk of identity theft, such as victims of data breaches or those whose personal information is publicly exposed. It also helps protect deceased individuals’ identities, a targeted group for fraud.
How to Protect Yourself From Tax-Related Identity Theft
Prevention is vital even with programs like TPP in place. Consider the following tips:
- Protect your Social Security number carefully and avoid sharing it unnecessarily. Read more about how the Social Security Number works on FinHelp’s Social Security Number (SSN) guide.
- Be wary of unsolicited IRS communications. The IRS never initiates contact via phone, email, or social media to request personal data.
- File your tax returns early and electronically to reduce the risk window for fraudsters.
- Protect your online accounts with strong, unique passwords and up-to-date security software.
- Monitor your credit reports regularly for suspicious activity.
- Consider enrolling in the IRS Identity Protection PIN (IP PIN) program, which adds an extra layer of security by requiring a unique six-digit PIN with your tax filing. Learn more at IRS Identity Theft Protection PIN.
Clearing Up Common Misconceptions
- The IRS will only contact you by mail regarding identity theft issues, never by phone or email.
- An IP PIN helps prevent tax return fraud but doesn’t protect against all identity theft forms.
- The TPP works proactively on all tax returns, not just those from confirmed identity theft victims.
- Being flagged by the TPP is a security check, not an accusation.
What to Do If You Suspect Tax Identity Theft
If you believe your identity has been stolen for tax fraud:
- Submit IRS Form 14039, Identity Theft Affidavit.
- Continue filing and paying taxes as required.
- Respond promptly to any IRS notices.
- Contact the IRS Identity Protection Specialized Unit.
- Report the theft to the FTC at IdentityTheft.gov for recovery assistance.
- Place fraud alerts or freeze your credit reports with major credit bureaus.
The IRS, through the Taxpayer Protection Program, offers vital support to protect taxpayer identities and limit fraudulent activities. For official details, visit the IRS Identity Protection page IRS Identity Protection.
Sources:
- IRS. “Identity Protection: Prevent Identity Theft and Get an IP PIN.” https://www.irs.gov/individuals/identity-protection
- IRS. “Dirty Dozen Tax Scams.” https://www.irs.gov/newsroom/dirty-dozen-tax-scams
For related reading, see FinHelp’s articles on IRS Identity Theft Protection PIN and Social Security Number (SSN).