Tax Dictionary – Tax Identity Theft
Tax-related identity theft occurs when someone uses your stolen Social Security Number to file a tax return claiming a fraudulent refund.
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Tax identity thieves steal taxpayers’ names and Taxpayer Identification Numbers (like Social Security Numbers or Individual Taxpayer Identification Numbers) for one of two reasons:
To file a return to get your refund. This is the most common type of tax identity theft. You find out about it when you try to file a return, but the IRS rejects it because someone already filed a return using your information. If you file a paper return, the IRS will send you a notice telling you the same thing. Chances are, you’re the victim of tax identity theft.
To get a job and report the income under your Social Security Number. This type of fraud is an even bigger headache to resolve than a stolen refund. If this happens, you’ll find out about it later in the year, when the IRS sends you a notice about income that you didn’t report or pay taxes on. In fact, the income isn’t yours at all, but was earned by a thief and reported under your identity. Now, the IRS is auditing you or trying to collect taxes from you. These cases can take about a year to resolve. During that time, you’ll receive IRS notices and may even have your refunds frozen until the issue is resolved.
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