Optima Tax Shield: Tax Help for Victims of Tax Identity Theft

Key Takeaways  

• Tax identity theft occurs when someone uses your Social Security number (SSN), Individual Taxpayer Identification Number (ITIN), or other personal information to commit tax fraud, such as filing a fraudulent return or claiming a refund. 

• Common warning signs of tax identity theft include rejected tax returns, unfamiliar IRS notices, unexpected income records, and unauthorized changes to your tax account. 

• To prevent tax identity theft, protect personal information, secure online accounts, recognize IRS impersonation scams, monitor your tax records, and request a free IRS Identity Protection PIN (IP PIN). 

• If you suspect tax identity theft, secure compromised accounts, report the incident through appropriate channels, follow IRS instructions, keep filing and paying taxes as required, and contact your state tax agency about additional steps. 

• IRS Form 14039 is not required for every identity theft case. Follow current IRS guidance to determine whether you need to submit an Identity Theft Affidavit or take another reporting step. 

• Optima Tax Shield helps taxpayers monitor and protect their tax identities with 24/7 tax ID theft monitoring, suspicious activity alerts, monthly IRS status reports, IRS notice analysis, and identity restoration support. Its free plan includes core monitoring features at no monthly cost. 

Tax identity theft occurs when someone uses another person’s personal information to commit tax-related fraud, such as filing a fraudulent tax return or attempting to claim a refund. Victims may not discover the problem until their legitimate tax return is rejected or they receive an IRS notice about unfamiliar activity. 

Optima Tax Shield helps taxpayers take a proactive approach to protecting their tax identities through 24/7 tax ID theft monitoring, suspicious activity alerts, monthly IRS status reports, IRS notice analysis, and identity restoration support. Its free plan provides core monitoring features, while paid plans offer additional tax preparation and support benefits. 

Understanding what tax identity theft is, how to recognize warning signs, and what to do if your information is compromised can help you protect your tax records and respond to potential fraud. 

What Is Tax Identity Theft? 

Tax identity theft is a form of identity fraud in which someone uses another person’s Social Security number (SSN), Individual Taxpayer Identification Number (ITIN), or other personal information to commit tax-related fraud. Criminals may file fraudulent returns, attempt to obtain refunds, or misuse tax information for other purposes. 

How Does Tax Identity Theft Happen? 

Criminals can obtain personal information through data breaches, phishing scams, stolen documents, compromised accounts, and fraudulent websites. Common forms of tax identity theft include: 

• Fraudulent tax return filing: Someone uses your SSN to submit a tax return and claim a refund before you file. 

• Refund fraud: A criminal attempts to redirect a refund to an account they control. 

• Employment-related identity theft: Someone uses your SSN to obtain employment, potentially creating unfamiliar wage records. 

• Dependent-related fraud: Someone claims your child or another dependent without your permission. This isn’t always fraud. It can also be a mix-up, such as a custody dispute. If your e-filed return is rejected for a duplicate dependent claim, a valid IP PIN on your return lets you e-file anyway. 

• Tax account compromise: A criminal accesses your tax account and attempts to misuse sensitive information. 

For example, suppose you attempt to e-file your tax return, but the IRS rejects it because a return has already been submitted using your SSN. This could indicate tax identity theft and should be investigated promptly. 

What Are the Warning Signs of Tax Identity Theft? 

Recognizing suspicious activity early can help you determine whether further action is necessary. Warning signs include: 

• An e-file rejection because a return has already been submitted using your SSN or ITIN. 

• An IRS notice about a return or income you do not recognize. 

• Wage records associated with an unfamiliar employer. 

• Unexpected changes to your IRS account. 

• Tax documents for employment you never held. 

These signs do not automatically prove identity theft. Reporting errors and other discrepancies can also cause problems, so verify the information and follow the IRS’s instructions. 

What Happens If Someone Steals Your Tax Identity? 

Tax identity theft can affect refunds, tax records, and your ability to file a return without complications. Resolving the problem may require documentation, communication with the IRS, and follow-up to correct inaccurate information. 

Delayed Refunds and Incorrect Tax Records 

If someone files a fraudulent return using your SSN, the IRS may need to verify your identity before processing your legitimate return. This can delay your refund and require additional paperwork. 

Employment-related identity theft can also create unfamiliar wage records. For example, you might receive a Form W-2, a Form 1099, or an IRS notice showing income from an employer you never worked for. Do not report that income on your return or amend a return you have already filed. Instead, follow the instructions in any IRS notice you receive and contact the Social Security Administration, which can help correct your earnings record. 

Financial and Administrative Stress 

Victims may need to secure accounts, report fraud, respond to notices, and maintain records throughout the recovery process. If the problem affects multiple tax years or involves several types of identity theft, resolving it may become more complicated. 

The IRS has procedures for investigating tax-related identity theft and correcting affected records. Promptly following those procedures can help you address the issue. 

How to Prevent Tax Identity Theft 

You can reduce your risk of tax identity theft by protecting personal information, securing online accounts, recognizing scams, and monitoring your tax records. Although no single precaution eliminates every risk, several protective measures can make it more difficult for criminals to misuse your information. 

Protect Your Social Security Number 

Your SSN and ITIN are sensitive identifiers. Share them only when necessary and with trusted organizations. 

• Store tax returns and financial documents securely. 

• Shred paperwork containing personal information before discarding it. 

• Avoid sending tax documents through unsecured channels. 

• Verify unexpected requests for sensitive information. 

• Be cautious when sharing personal information online or over the phone. 

Recognize IRS Impersonation Scams 

Criminals may pose as IRS representatives or tax professionals to obtain personal information. They may use threatening messages, fake websites, or urgent demands for payment. 

Do not click suspicious links or provide sensitive information simply because a message claims to come from the IRS. Instead, verify all communication through official IRS channels. Be especially cautious of unexpected demands for payment through unusual methods or threats of immediate arrest. 

Secure Your Online Accounts 

Use strong, unique passwords for email, financial, and tax-related accounts. Enable multifactor authentication wherever available and keep your devices and security software updated. 

Your email account deserves particular attention because criminals may use it to reset other passwords or access sensitive communications. Review account activity for unfamiliar logins, unexpected password-reset messages, or unauthorized changes. 

Get an IRS Identity Protection PIN 

An IRS Identity Protection Personal Identification Number (IP PIN) is a six-digit number that helps prevent someone else from filing a covered federal income tax return using your SSN or ITIN. 

Anyone with an SSN or ITIN who can verify their identity can request a free IP PIN, and the fastest way is through your IRS online account. The IRS issues a new IP PIN every year. If you request yours online, you will need to log in and retrieve your new number each year. It’s available starting in January. Once you have an IP PIN, enter it on any Form 1040-series return you file that year. That includes amended returns (Form 1040-X) and returns for earlier years. You don’t need it on an extension request (Form 4868) or your state return. The IRS will never call, email, or text you to ask for your IP PIN. 

An IP PIN adds an important layer of protection, but it does not prevent every type of identity theft. Keep it confidential and follow IRS instructions for retrieving it if needed. An IP PIN applies to federal returns, so check with your state tax agency about any additional protection for your state return. 

Monitor Your IRS Account 

Regularly review your IRS account for unfamiliar activity, unexpected balances, and other discrepancies. Pay attention to correspondence and investigate notices involving returns or income you do not recognize. 

Tax identity monitoring services offer an additional way to stay informed about potential issues. Optima Tax Shield provides monitoring and reporting features designed to help taxpayers keep track of tax-related activity. 

What Should You Do If You Are a Victim of Tax Identity Theft? 

If you suspect tax identity theft, secure your information, report the incident through appropriate channels, and follow IRS instructions. The correct response depends on whether someone filed a fraudulent return, misused your SSN for employment, or compromised an account. 

Steps to Take After Tax Identity Theft 

1. Secure your accounts. Stop interacting with anyone who contacted you, change compromised passwords (including your IRS online account password), enable multifactor authentication, and contact financial institutions if necessary. 

1. Report the incident. Visit IdentityTheft.gov for guidance and a personalized recovery plan. 

1. Review IRS guidance. Follow the IRS’s identity theft instructions and verify any notices you receive. 

1. Address fraudulent filings. If your electronically filed return is rejected because someone has already filed using your information, follow the IRS’s instructions for submitting your legitimate return. First, check that you typed your SSN correctly. If it’s right, you’ll likely need to file on paper. Attach Form 14039 to the back of your return, or submit the form online instead. Use only one method, and don’t file it twice. 

1. Consider an IP PIN. This can help prevent fraudulent federal income tax returns filed using your identity. 

1. Keep detailed records. Save IRS notices, submitted forms, case numbers, and communications. 

1. Keep filing and paying. File your tax returns and pay any tax you owe as usual while the identity theft issue is being resolved. 

1. Check with your state. Contact your state tax agency to find out whether additional steps apply. 

When Is IRS Form 14039 Necessary? 

IRS Form 14039, Identity Theft Affidavit, is used to report possible tax-related identity theft to the IRS, but most people do not need to file it. File it only if the IRS tells you to, if you cannot use the IRS Identity and Tax Return Verification Service, or if you think someone used your Social Security number on a tax return and the IRS hasn’t contacted you. A data breach that exposed your SSN is one example. A breach that exposed only a credit card number won’t affect your tax account. Do not file it if you have already submitted one or reported through IdentityTheft.gov, if the IRS has already sent you a letter or notice, or if you used or were told to use the Identity and Tax Return Verification Service. Businesses, trusts, estates, and tax-exempt organizations use Form 14039-B instead. Review the current IRS instructions before you submit anything. The IRS remains the authority on how fraudulent tax activity should be reported and resolved. 

How Can Optima Tax Shield Help With Tax Identity Theft? 

Optima Tax Shield offers tax identity monitoring and support services designed to help taxpayers identify potential concerns and stay informed about their tax information. Its features include ongoing monitoring, alerts, monthly IRS status reports, notice analysis, and identity restoration support. Features vary by plan. Check out Optima Tax Shield for what each plan includes. 

24/7 Tax ID Theft Monitoring and Alerts 

Optima Tax Shield includes 24/7 tax ID theft monitoring and alerts for suspicious activity. These features are intended to help members recognize potential tax identity concerns without relying entirely on occasional manual account checks. 

For example, if a taxpayer becomes aware of suspicious activity, they can investigate the information and take appropriate steps before the issue creates additional complications. Alerts should be treated as a reason to verify activity, not automatic proof that fraud has occurred. 

Monitoring cannot guarantee that every instance of identity theft will be detected or prevented. Protecting personal information and following IRS safeguards remain important. 

Monthly IRS Status Reports 

Optima Tax Shield includes monthly IRS status reports in its free and paid plans. These reports provide a recurring way for members to review their tax status and identify information that may require further attention. 

For example, a taxpayer who notices an unfamiliar balance or discrepancy can investigate the issue rather than wait until the next filing season. Important discrepancies should always be verified through official IRS records. 

IRS Notice Analysis 

IRS notices can be confusing, particularly when they reference unfamiliar income, tax balances, or filing activity. Optima Tax Shield offers IRS notice analysis to help members better understand tax-related correspondence. 

Understanding what a notice concerns and what action it requests can help taxpayers determine their next steps. However, notice analysis does not mean every notice indicates identity theft or that every tax issue will automatically be resolved. 

Identity Restoration Support 

After discovering tax identity theft, taxpayers may need to report the incident, secure accounts, respond to IRS correspondence, and address inaccurate records. 

Optima Tax Shield offers identity restoration support to help members navigate tax identity concerns and understand the steps involved in addressing suspicious activity. The appropriate recovery process depends on each case, and the IRS remains responsible for investigating federal tax account issues. 

Frequently Asked Questions About Tax Identity Theft 

What Is Tax Identity Theft? 

Tax identity theft occurs when someone uses another person’s identifying information to commit tax-related fraud, such as filing a fraudulent return or attempting to claim a refund. 

How Can I Prevent Tax Identity Theft? 

Protect your personal information, secure online accounts, recognize scams, obtain an IRS IP PIN, and monitor your tax records for unfamiliar activity. 

Does Optima Tax Shield Offer Free Tax Identity Protection? 

Yes. Optima offers a $0 per month Optima Tax Shield plan that includes 24/7 tax ID theft monitoring, a monthly IRS status report, and IRS notice analysis. 

Can Optima Tax Shield Help After Identity Theft Occurs? 

Optima Tax Shield offers identity restoration support and monitoring-related services that may help members navigate tax identity concerns. Recovery steps depend on the circumstances, and the IRS remains responsible for investigating federal tax account issues. 

Tax Help for Victims of Tax Identity Theft 

Tax identity theft can complicate refunds, tax records, and IRS correspondence. Protecting personal information, recognizing scams, and responding promptly to suspicious activity can help you reduce your risk and address potential problems. 

Optima Tax Shield provides 24/7 tax ID theft monitoring, alerts, monthly IRS status reports, IRS notice analysis, and identity restoration support. Its free plan offers core monitoring features at no monthly cost, while paid plans provide additional tax-related benefits. Optima Tax Relief is the nation’s leading tax resolution firm with over $3 billion in resolved tax liabilities.      

If You Need Tax Help, Contact Us Today for a Free Consultation.