Someone Stole My Tax Refund Check. What Should I Do?

Do you think it’s possible someone stole your tax refund check? You wouldn’t be alone. In 2020, just under 1.4 million people reported cases of identity theft, and around 400,000 of those involved the theft of government benefits or documents—including tax refunds. The issue was concerning enough that the IRS started what it calls Identity Theft Central to provide information about identity theft.

Find out how identity theft happens below. Then learn what action you should take if you believe your tax refund was stolen.

How Does Identity Theft Happen?

Identity theft occurs when someone gathers enough information about you that they can impersonate you to a sufficient degree to commit fraud. For example, if someone gets enough of your sensitive personal information, they can apply for credit cards in your name. They receive the cards after approval, run up balances and never pay them because the account is all in your name. 

Another version of identity theft occurs when someone has enough information to file a fake tax return in your name. They get a refund in your name, and when you go to file your legitimate tax return, you find you can’t get a refund. Someone stole it out from under you.

Some methods people use to get the information required to commit identity theft include:

• Imposter scams. The scammers email, call or otherwise contact you while pretending to be someone else, such as the IRS. They use that contact to try to get personal information out of you.
• Social media scams. Scammers comb social media, looking for personal information people might have shared. They also use direct messages to try to get information from you.
• Dark web databases. If your information is included in a data breach, it may be shared or sold to scammers online.
• Checking your trash. In some cases, scammers simply go through unshredded documents in the garbage to get the information they need.

When someone uses information in this way to file a fake tax return, it’s a crime called Stolen Identity Refund Fraud. There are serious penalties for this crime. It’s always best to safeguard your private information as much as possible to reduce your risk of becoming a victim. 

How to Know if Your Tax Refund Was Stolen

The IRS provides a tool called Where’s My Refund? that lets you track the status of your refund. If you’re worried someone has filed a fake return in your name or tried to steal your refund check, use that tool to see what’s going on with your refund. You can also ask the IRS to do a refund trace to find out more about where the tax refund check or deposit went.

The IRS will also notify you when more than one return is filed in your name for a particular year. If you file a tax return and receive this notice, there’s a good chance some fraud has occurred. 

Important Steps to Take after Tax Refund Fraud

If you’ve received a notice from the IRS stating that more than one return has been filed in your name, or if you believe your identity has been used fraudulently, you should act quickly. Follow the steps below. 

1. Report the Fraud

If your Social Security number was compromised and you think you may be the victim of tax-related identity theft, file a report with your local police and file a complaint with the Federal Trade Commission at www.identitytheft.gov or by calling the FTC Identity Theft Hotline at 1-877-438-4338.

2. File a Report With the IRS

Once you’ve filed a police report, file an IRS Form 14039 Identity Theft Affidavit.  Print the form and mail or fax it according to the instructions.

3. Pay Your Taxes

Be sure to continue to pay your taxes and file your tax return on time, even if you must do so by mailing in paper forms.

4. Check Your Credit Reports and Scores

Just because you were first alerted to the problem through a false tax return doesn’t mean that’s where the ID theft started.  A sudden drop in credit scores can be a sign your identity has been stolen. You should also monitor your credit reports for activity that isn’t yours.

You can get a free copy of your credit report from each of the major credit bureaus at AnnualCreditReport.com. You can also check 28 of your FICO scores and get regularly updated information about your credit reports and scores when you sign up for ExtraCredit.

5. Add Fraud Alerts to Your Credit Reports

Contact each credit bureau and add a fraud alert to your credit report. You can do this online or via phone. A fraud alert makes it harder for someone to apply for credit in your name.

6. Close Any Fraudulent Accounts

Reach out to creditors to close any accounts opened in your name fraudulently. You should also report them as fraudulent to the banks and lenders. 

7. Change All Your Passwords

Thieves know people use the same password for multiple websites and accounts. Change all your passwords immediately if you believe you’re the victim of identity theft or fraud. It’s also a good idea to change your passwords regularly, even if you aren’t a victim of identity theft. 

8. Follow Up on Your Case

If you informed the IRS about taxpayer ID theft and didn’t receive a resolution, contact the Identity Protection Specialized Unit at 1-800-908-4490 about your case. If you’re experiencing financial difficulties because of the delay, you can reach out to the taxpayer advocate service, an independent organization within the IRS, at 877-777-4778. 

9. Stay Calm & Be Patient

A typical case of ID theft can take an average of 120 days to resolve, according to the IRS. Remember that the average might not reflect your case, and it could take a year or more to resolve it.

Just remember, the IRS will eventually pay you your refund, but if you’re experiencing financial difficulties because of the delay, you can contact the taxpayer advocate service, an independent organization within the IRS, at 877-777-4778.

File Your Tax Return as Early as Possible

One of the best defenses against this type of identity theft is an early offense. Get your tax return in early to beat potential fraudsters to the punch.

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