Tax-Related ID Theft

Tax-Related ID Theft

Consumer Alert

Bill Schuette

Attorney General

The Attorney General provides Consumer Alerts to inform the public of unfair, misleading, or deceptive business practices, and to provide information and guidance on
other issues of concern. Consumer alerts are not legal advice, legal authority, or a binding legal opinion from the Department of Attorney General.

Tax-Related Identity Theft

The increased popularity of electronic filing of tax returns has made it easier for tax identity theft to thrive. Tax identity theft is now a popular and relatively
easy way for tax scammers to steal money.  As one former tax thief told 60 Minutes: “’I could wake up in the comfort of my own home, and
just get on a laptop, do about 15 returns a day. Fifteen times $3,000 a return, that’s $45,000 a day.’” In 2013, crooks took $5.3 billion from the
US Treasury through tax ID fraud. 

Tax-related identity theft occurs when someone uses your Social Security number to file a tax return claiming a fraudulent refund. Because many taxpayers have more
withheld from their paychecks than they owe, they will need to file claims for refunds from the IRS. Taxpayers can file tax returns and claim a refund as soon as
employers issue W-2 forms to employees that show the income earned and the amount of taxes withheld. 

Employers have until January 31st after the tax year ends to give employees their W-2 forms—and they have until the end of March to file that W-2 information
with the IRS. Because tax refunds may be issued before employer W-2 information is received and verified by the IRS, fraudsters have a window to submit fake tax
returns. And a refund can be sent to any address or account the fraudster specifies. All of this occurs without the taxpayer’s knowledge.

The IRS is often the first to inform a taxpayer that tax identity theft has occurred. This may be discovered when a victim’s return is rejected, which can
occur quickly if the taxpayer files electronically. But if the taxpayer files by mail, no expected refund will appear and it will take longer for the IRS to notify
the taxpayer about the fraudulent return.

In other cases, a taxpayer may first learn of the fraud from some other unexpected source, like when the taxpayer is turned down for a loan because a fake return was
filed reporting an income less than what the taxpayer actually earns. 

Don’t think that you are not a target because you do not make a lot of money or have a large refund to claim. Tax ID scammers try to stay under IRS radar and
therefore, they tend to keep their claims under $4,000.00.

What to do if you are a Victim of Tax ID fraud:

  • Exhale. Remember that even if a false refund is claimed and issued in your name, ID scammers don’t actually steal “your” refund money: they
    steal it from the federal government. If you are legally entitled to a tax refund, being a victim of ID tax theft will not change that.Fraudsters can delay you
    from getting your refund, which can be painful, but you will, eventually, get your refund.
  • Victims should immediately contact the IRS Identity Protection Specialized Unit at 800-908-4490. Report the fraud and ask for ID Theft Affidavit Form 1439
    (form is also available online through Publication 5027 Identity Theft Information for Taxpayers). Complete the form and continue to pay your taxes and
    file your tax return, even if you must do so by paper.
  • One of the most effective ways to protect yourself from this type of identity theft is to file your tax return as soon as possible, and protect your data and
    personal information.
  • Crooks like to convince you they are legitimate by using your name, address, or other personal information to get you to give them more personal information.
    Don’t fall for it!
  • An alternative strategy suggested by those practiced in risk management encourages you to adjust your withholding –especially when life changes like
    marriage or new dependents occur. If you don’t give the government more money that you need to, then you won’t be at risk waiting for a large tax
    refund if you are a victim of ID tax theft.

How to Protect yourself from Tax ID fraud:

For more identity theft prevention measures, look at the Attorney General’s Identity
Theft Information for Michigan Consumers alert

Additional Information

Consumers may contact the Attorney General’s Consumer Protection Division at:

Consumer Protection Division

P.O. Box 30213

Lansing, MI 48909


Fax: 517-241-3771

Toll free: 877-765-8388

Online Complaint Form