Clearing your name after identity theft can be taxing

You probably missed these observances last week, but don’t miss the message.

The National Cyber Security Alliance designated Jan. 28 as “Data Privacy Day” in an effort to make people more aware of the importance of protecting their personal information. “Tax Identity Theft Awareness Week,” promoted by the Federal Trade Commission, ran from Jan. 25 to Jan. 29.

Both are good campaigns. And while there are some things we can do to protect our privacy, the reality is that guarding our personal data is like trying to put toothpaste back in the tube. It’s a tough task. Just ask Crystal, a Virginia woman who had her identity stolen last year. A fraudulent tax return was then filed in her name.

Crystal, who asked that her last name not be used, worries that she’ll be victimized again this year. No matter what Crystal did to protect her data — faithfully checking her credit reports, for example — she couldn’t fend off the scoundrels who used her Social Security number to file a 1040-EZ return.

For people like Crystal who’ve been victimized, the IRS has a list of recommended actions. Crystal followed the steps last year after she realized her data had been compromised. She filed a paper return, attaching IRS Form 14039, the “Identity Theft Affidavit.” She called the IRS’ Identity Protection Specialized Unit (800-908-4490) to answer questions in order to prove she was the real taxpayer.

Crystal said she was told by the IRS that, prior to the start of this year’s filing season, she would receive a special “Identity Protection Personal Identification Number” (or IP PIN) in the mail to help protect her tax returns going forward.

She’s still waiting on the number.

So she called the IRS’ identity-protection unit again. The advice she got was simply to file her return early.

“I told them I will file as early as I can and had planned on doing that, but I have to wait until I get W-2s and 1099s, whereas the fraudsters can just make up numbers and file before me,” Crystal told me in an interview. “I am so frustrated. I feel like I’ve been left out in the cold by the IRS.”

A spokesperson for the IRS said taxpayers who had their identities used to file fraudulent returns generally will be eligible for the special PIN after their cases have been resolved. This year, the IRS sent 2.7 million taxpayers IP PINs. As for Crystal, the IRS said an additional small group of taxpayers should receive their notices in the next couple weeks.

Earlier this month, the IRS announced it was beefing up measures to help taxpayers. As part of a test program, all taxpayers in the District of Columbia, Florida and Georgia — regardless of whether they are identity victims — can apply to get the six-digit IP PIN to use with their tax returns. These three locations were chosen because of their higher rates of identity theft, the IRS said.

To opt into the program, you can create an account at IRS.gov/getanippin. As part of the registration process, you’ll have to verify your identity. Please note that once you get an IP PIN, you can’t opt out. You will have to use the number to confirm your identity on all federal tax returns you file this year and in subsequent years.

Here are some other resources to be proactive when it comes to tax-related identity theft:

Read IRS Publication 4524 “Security Awareness for Taxpayers.”

Go to youtube.com/user/irsvideos and look for the 13 videos in the agency’s “Identify Theft” playlist.

If you become a victim, here are some resources on irs.gov to help you start clearing things up:

Read this guide: “IRS Identity Theft Victim Assistance: How It Works.”

You have the option of requesting a copy of the fraudulent return. It will be redacted, but the IRS says there’ll be enough information to determine how your information was used. Search for “Instructions for Requesting Copy of Fraudulent Returns.”

The FTC recently announced that people can now get a free, personalized plan to help recover from identify theft, including tips, online fillable forms and template letters. Go to identitytheft.gov. There is a customized option if someone else has used your information to file a tax return. The site is also integrated with the FTC’s consumer complaint system and will allow identity-theft victims to file a complaint with the agency.

The timing of the site launch should really help people like Crystal. But if you become an identity theft victim, dig deep for a lot of patience, because clearing your name can be taxing.