Tax Identity Theft: Stepping Up When It Matters Most

Tax identity theft is more than a bureaucratic hassle—it’s a moment that calls for your full attention and action. Just as there’s no "auto-pilot" in high-stakes roles, there’s no room for passivity when your financial identity is at risk. The Internal Revenue Service (“IRS”) expects taxpayers to be vigilant and responsive when identity theft strikes.

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How the IRS Responds to Suspicious Activity

The IRS, through its Taxpayer Protection Program, actively monitors for suspicious tax returns filed under your name and Social Security Number (“SSN”). If the IRS detects something unusual, you may receive one of several official notices:‍

• ‍Letter 5071C: Invites you to verify your identity and tax return online.‍
• Letter 4883C: Provides a toll-free number for phone verification.‍
• Letter 5747C: Offers instructions for in-person verification at a local Taxpayer Assistance Center.[1]

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Your Role: Immediate and Intentional Action

When you receive an IRS letter, it’s time to act—deliberately and without delay. Here’s what you should do:

• Follow the instructions in your letter, whether online, by phone, or in person.
• Gather supporting documents: the IRS letter, a prior-year tax return, and your identification.
• If you did not file the return, inform the IRS so they can remove the fraudulent filing from your record.
• If you did file, confirm this so your legitimate return can be processed.
• Do not file Form 14039 in response to these letters; it is not required unless you are instructed otherwise.[2]

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IRS Protections and the Internal Revenue Code

The IRS generally operates according to the Internal Revenue Code (“IRC”), which mandates the protection of taxpayer information and the correction of fraudulent filings. Once your identity is verified, the IRS will:

• Remove any fraudulent returns from your account.
• Mark your account with an identity theft indicator for future protection.
• Enroll you in the Identity Protection PIN (“IP PIN”) program, issuing a new six-digit PIN annually for use on all future tax filings.[3]

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If You Discover the Problem First

Sometimes, you may realize you’re a victim before the IRS does or before the IRS sends one of the notices described above. If you discover unauthorized tax activity:

• File your tax return by paper if e-filing is not possible.
• Complete and attach IRS Form 14039, Identity Theft Affidavit, to your paper return or separately (as applicable).
• Submit your documents to the appropriate IRS address.[4]

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What to Expect After Reporting

Your case will be assigned to the IRS Identity Theft Victim Assistance (“IDTVA”) unit. These specialists will:

• Investigate which tax years are affected.
• Remove fraudulent returns and process your legitimate return(s).
• Mark your account for future protection.

Resolution times can vary, but the IRS is generally committed to resolving cases as quickly as possible. Avoid sending duplicate forms or making repeated inquiries, as this can delay your case.[5]

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Additional Steps for Victims

Victims of identity theft should also take other affirmative actions to protect themselves:

• Respond promptly to all IRS requests.
• If you receive a balance due notice, call the number provided.
• Follow Federal Trade Commission (“FTC”) guidance for identity theft victims.
• Check with your state tax agency for additional requirements.
• Use strong security practices and be alert to phishing scams.
• Stay informed through the IRS’s Taxes. Security. Together. campaign.[6]

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Conclusion

Tax identity theft is a challenge that demands your attention and action. The IRS has systems in place to help you recover and protect your account. However, the first step is yours—be intentional, be responsive, and set the standard for how to handle these challenges. Montgomery Legal is standing by to help you navigate tax identity theft.

Contact Montgomery Legal today to discuss your identity theft. Schedule a Consultation or call (214) 432-6100.

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[1] See IRS identity theft victim assistance: How it works, IRS, available at https://www.irs.gov/individuals/how-irs-id-theft-victim-assistance-works.

[2] Id.

[3] Id.

[4] Id.

[5] Id.

[6] Id.