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IRS, FTC expand electronic fight against tax ID theft

Tax identity theft masked hacker tax forms

Identity theft is bad enough, but when it's connected to your tax data, things can be particularly scary.

Not only does a crook have personal information about you, but he or she can steal the tax refund you've been counting on.

In some situations where your data has been hacked, you'll want to file a Form 14039, Identity Theft Affidavit, to let the inform the Internal Revenue Service that you think you may be a victim of tax-related identity theft.

Now you finally can file that form online.

IRS, FTC take ID theft fight further online: The IRS now will now allow consumers to electronically report identity theft through the Federal Trade Commission's IdentityTheft.gov website.

Under the new FTC-IRS initiative, IdentityTheft.gov is the first and the only place where consumers can submit an IRS Form 14039 electronically.

This new e-effort should make it easier for consumers to report tax-related identity theft and to receive help in recovering.

Previously, to report a stolen identity that could be used to file a fake tax return and claim a fraudulent refund, a victim had to file a paper Form 14039.

IRS Form 14039 identiy theft affidavit excerpt

The IRS does at least offer a fillable version at IRS.gov that taxpayers can complete online, print and then snail mail to the tax agency.

But while potential tax identity theft victims are doing that, the crooks are already/still online doing their damage.

Now, however, the IRS-FTC partnership means that identity theft victims can fight back on the same e-field to report identity theft.

e-Reporting advantages: Once you submit the Form 14039 electronically at the FTC site, that federal agency then will electronically transfer the identity theft form, but not the taxpayer's return which is affected, to the IRS.

Here’s how it works:

IdentityTheft.gov will ask you questions to collect the information the IRS needs. It will then use your information to populate Form 14039 and let you review it. Once you're satisfied with what's on the form, you can submit it immediately electronically, as well as download a copy for yourself. About 30 days later, the IRS will send you a letter confirming it received the information.

This direct, secure transference of your identity theft affidavit to the IRS is one of the benefits of this e-reporting option, says the FTC in its announcement of the new system.

Other pluses, according to the IRS and FTC, include:

  • Having specific directions that will walk the victimized taxpayers through the completion of Form 14039.
  • Getting additional guidance on how to place fraud alerts on your credit files, check your credit reports and take other steps to stop the tax identity theft from harming your accounts.
  • Receiving help in resolving any other problems the tax identity theft may have caused.

Identity theft follow-up steps: As anyone who's been an identity theft victim, including me, can attest, straightening things out can be a real hassle.

The FTC says its new website should help here.

After e-filing a report of identity theft at IdentityTheft.gov, individuals whose tax and personal lives in general have been wrecked by this pervasive crime will be able to get an Identity Theft Report. This can be used in place of a police report to help clear credit reports of fraudulent information.

In addition, IdentityTheft.gov will send victims customized letters they can send to creditors, debt collectors and others to help prove that the ensuing financial problems were due to identity theft, not the victim's actions.

Taxes continue regardless: Remember, though, even though you're a victim, you still must meet your tax obligations. Filing an identity theft affidavit, either electronically now or the old-fashioned paper way, doesn't eliminate the need to pay your taxes.

If you can't e-file your tax return because an ID thieve already has submitted a fake 1040 in your name, you still need to fill out your legitimate tax return by hand and mail the paper former to the IRS along with any taxes you owe.

While the new electronic reporting should help, you also should check out today's tax tip, courtesy of IRS Fact Sheet 2018-6, on exactly when to file a Form 14039, Identity Theft Affidavit.

Here's hoping you don't ever have to tell the IRS electronically or otherwise that your identity has been stolen.

But just in case, it's good to know that Uncle Sam has added another weapon in his arsenal against this crime.

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