Real Case: A Client’s Triumph Over Identity Theft Tax Trouble

Issue: IRS Proposing Taxable Income Associated with Identity Theft

$$ at Stake: Almost $4,000

When a client received an audit letter from the IRS proposing a tax increase of almost $4,000, she was understandably perplexed. The IRS claimed she had received income from two sources she didn’t recognize: one from a company she had never worked for and another from the State Unemployment Agency. Suspecting identity theft, she turned to us for help.

Recognizing the urgency of the situation, we immediately sprang into action. Our first priority was to gather all the necessary supporting documents to prove that our client had not received the alleged income and was indeed a victim of identity theft. We worked diligently to compile evidence that would clear her name and absolve her of any liability.

Despite the complexity of the case and the time it took to gather the required documentation, we were able to respond to the IRS inquiry on time. Throughout the process, our client remained understanding, knowing that resolving this kind of audit could take time and patience.

After patiently awaiting the IRS’s review of our supporting documents, we received the news we had been hoping for: the IRS agreed to remove the entire bill. The relief and joy expressed by our client were palpable, knowing that she had been spared from a significant financial burden and the ramifications of identity theft.

If you think someone has stolen your identity, it’s important to act fast to protect yourself and reduce any harm. Here’s what you can do:

1. Contact Your Bank: Let your bank know about the possible identity theft. They can help secure your accounts and look into any suspicious transactions.
2. Place a Fraud Alert: Call one of the three main credit bureaus—Equifax, Experian, or TransUnion—to put a fraud alert on your credit report. This tells lenders to take extra care before approving credit in your name.
3. Check Your Credit Report: Get your credit reports from AnnualCreditReport.com or from each credit bureau. Look for any accounts you didn’t open or any unusual activity. If you find mistakes, tell the credit bureau and the company that reported the error.
4. Report to the FTC: Go to IdentityTheft.gov or call 877-438-4338 to report the identity theft to the Federal Trade Commission (FTC). They can help you make a recovery plan and give you a report to use when talking to the police and disputing any charges made by the thief.
5. File a Police Report: Contact your local police and file a report about the identity theft. Keep a copy for your records and give copies to any companies affected by the theft.
6. Check Your Social Security Earnings: Contact the Social Security Administration at 800-772-1213 or visit SSA.gov to make sure your earnings record is correct.
7. Visit IRS.gov/IdentityTheft: The IRS has resources for dealing with tax-related identity theft.
8. Contact Your State Tax Agency: If you think your state taxes might be affected, find your state’s tax agency through IRS.gov/StateGovSites.
9. Consider a Credit Freeze: You can freeze your credit reports, making it harder for thieves to open new accounts in your name.
10. Monitor Your Accounts: Keep an eye on your bank and credit card statements for any unusual activity. Consider using a credit monitoring service for extra protection.
11. Update Your Passwords: Change your online account passwords, especially if you think they might be compromised.
12. Stay Informed: Keep up with the latest scams and identity theft news to protect yourself in the future.
13. Get Professional Help if Needed: If you’re feeling overwhelmed, consider getting help from a reputable identity theft resolution service or a lawyer who knows about identity theft cases.

By taking these proactive steps, you can minimize the impact of identity theft and work towards restoring your financial security.

This outcome is a testament to our dedication to our clients’ causes and our ability to navigate complex tax matters effectively. If you’re facing a similar situation with the IRS or suspect you may be a victim of identity theft, don’t hesitate to seek professional assistance. We’re here to help you navigate the challenges and secure the best possible outcome.