This has been going around in the news the last few days, but I wanted to write a quick follow-up in case this affects you or someone you know. Last week, TurboTax temporarily halted its state e-file services as a result of an increased level of “suspicious” filings. After investigation, TurboTax deemed that its software and databases had not been the source of the potential fraudulent activity and resumed e-filing state returns.
Even if the TurboTax system was not breached, this incident sheds light on an issue that occurs each tax season: identity theft. Online filing software, such as TurboTax, provides the perfect avenue for criminals to file fraudulent returns. It does not require you to sit down with a tax professional and provide proper documentation. As long as you can provide a Social Security number and basic personal information, you can submit a tax return and receive a bogus refund.
So what happens if you attempt to file your tax return and it is rejected because one was already fraudulently filed in your name? Contact the IRS immediately and inform them that you attempted to file a return and you believe your Social Security number may have been compromised. After notifying them by phone, you will be asked to file Form 14039 to formally store the information on file. I would also recommend applying for an Identity Protection PIN from the IRS. This way, even if your Social Security number has been compromised, someone would also need to obtain your PIN in order to file a fraudulent claim.
If you file your own return using online software and you receive any sort of communication from the IRS after you file your return that states there was a problem, contact your local CPA or tax preparer and have them reach out to the IRS on your behalf. Often times the issue will be attributed to a glitch in the IRS system, but it could also mean there is a larger problem that needs to be addressed immediately.