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Identity Theft – Information for Victims

Identity theft is a big problem.

IDtheftTaxpayers can encounter identity theft involving their tax returns in several ways. One instance is where identity thieves try filing fraudulent refund claims using another person’s identifying information, which has been stolen. Innocent taxpayers are victimized because their refunds are delayed.

Tax-related identity theft occurs when someone uses your stolen Social Security number to file a tax return claiming a fraudulent refund.

Generally, an identity thief will use your SSN to file a false return early in the year. You may be unaware you are a victim until you try to file your taxes and learn one already has been filed using your SSN.

The IRS does not initiate contact with taxpayers by phone request personal or financial  information. For phishing scams by phone, fax or mail call 1-800-366-4484 Toll free.

The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. Remember: Correspondence from the IRS never comes electronically. The agency always communicates via letters sent through the U.S. Postal Service. Report suspicious online or emailed Phishing scams to : phishing@irs.gov.

If you find yourself a victim of identity theft or find yourself at risk of having your identity stolen, you can alert the IRS about your situation with Form 14039 Identity Theft Affidavit.

Fill out the IRS Identity Theft Affidavit, Form 14039. Please write legibly and follow the directions on the back of the form that relate to your specific circumstances.

Link to access Form 14039 is https://www.irs.gov/pub/irs-pdf/f14039.pdf

For victims of identity theft who have previously been in contact with the IRS and have not achieved a resolution to their case, they can contact the IRS Identity Protection Specialized Unit, toll-free, at 800-908-4490 Extension 245.

If victims can’t get their issue resolved and are experiencing financial difficulties, contact the Taxpayer Advocate Service toll-free at 877-777-4778.

Contact the fraud departments of the three major credit bureaus:

  • Equifax – www.equifax.com, 800-525-6285
  • Experian – www.experian.com, 888-397-3742
  • TransUnion – www.transunion.com, 800-680

Report incidents of identity theft to the Federal Trade Commission at www.consumer.ftc.gov or the FTC Identity Theft hotline at 877-438-4338 or TTY 866-653-4261. Link to filing complaint with Federal Trade Commission is https://www.identitytheft.gov/

Report IRS impersonation scams to the Treasury Inspector General for Tax Administration’s IRS Impersonation Scams Reporting.  https://www.treasury.gov/tigta/contact_report_scam.shtml

Certain tax-related identity theft victims will be placed into the Identity Protection PIN program and annually receive a new, six-digit IP PIN that must be entered on the tax return. The IP PIN adds an extra layer of identity protection. Some taxpayers will be given the option of getting an IP PIN, using the IRS.gov/getanippin tool.

Link to IRS Taxpayers guide for Identity Theft is https://www.irs.gov/uac/Taxpayer-Guide-to-Identity-Theft

Tips to protect you from becoming a victim of identity theft

  • Don’t carry your Social Security card or any documents with your SSN or Individual Taxpayer Identification Number (ITIN) on it.
  • Don’t give a business your SSN or ITIN just because they ask. Give it only when required.
  • Protect your financial information.
  • Check your credit report every 12 months.
  • Secure personal information in your home.
  • Protect your personal computers by using firewalls, anti-spam/virus software, update security patches and change passwords for Internet accounts.
  • Don’t give personal information over the phone, through the mail or on the Internet unless you have initiated the contact or you are sure you know who you are dealing with.

Summary of the “Protecting Americans from Tax Hikes Act” of 2015

The December 2015 new “tax extenders” legislation just unveiled by Congress does more than merely extend dozens of expired tax breaks.

It also makes several important provisions permanent, with certain modifications, while delaying onerous rules under the Affordable Care Act.

Summary of the “Protecting Americans from Tax Hikes (PATH) Act” of 2015

Key Permanent Provisions

The list of key tax provisions that would become a permanent part of the tax code includes the following:

Child tax credit: IRS Form 8812-Going back to 2009, parents are entitled to a child tax credit of up to $1,000, subject to a phase-out, with an additional refundable credit of 15% of earned income in excess of $3,000. The $3,000 threshold was scheduled to increase to $10,000 in 2017. However, the new law restores the enhanced additional credit and makes it permanent.

College American Opportunity Tax Credit (AOTC): IRS Form 8862- Currently, the tax law allows taxpayers to claim a maximum $2,500 AOTC for each of four years of college education, subject to certain phase-outs based on modified adjusted gross income (MAGI). But the maximum credit was scheduled to revert to $1,800 in 2017 with lower MAGI phase-out thresholds. The new law would keep the enhanced AOTC on a permanent basis.

Teacher classroom expenses: IRS Form 1040- Previously, teachers and certain other educators were able to deduct up to $250 of their out-of-pocket classroom expenses above-the-line. In addition to reviving the deduction retroactive to January 1, 2015, the new law would index the $250 limit for inflation in future years.

State and local sales taxes: IRS Schedule A – Prior to 2015, a taxpayer could elect to deduct state and local sales taxes in lieu of deducting state and local income taxes. This optional deduction, which is especially valuable to residents of states with no or a low income tax, would be revived retroactive to January 1, 2015 and made permanent.

Employee transportation benefits: The tax law provides tax-free fringe benefits for employee mass transit passes, vanpooling and parking fees. The maximum monthly benefits for mass transit passes and vanpooling had been cut to $130 after 2014, but the new law would restore them to a monthly maximum of $250, the same as parking fees, effective January 1, 2015.

Section 179 allowance: IRS Form 4562 – The maximum Section 179 “expensing” allowance, which had technically plummeted to $25,000 after 2014, would be reinstated to $500,000, retroactive to January 1, 2015. Similarly, a phase-out threshold of $2 million would continue to apply, as opposed to only $200,000. These figures will be indexed for inflation in future years.

Charitable donations: IRS Schedule A – The new law permanently extends certain charitable incentives for donors, including enhanced deductions for contributions of conservation property, tax-free IRA distributions made directly to charity by individuals over age 70½ and favorable rules for donations of food inventory and contributions of stock by S corporation shareholders. These extensions would be retroactive to January 1, 2015.

Research credits: IRS Form 8765 – The near-annual ritual of extending the research credit could be over. The credit would become permanent dating back to January 1, 2015. Furthermore, effective January 1, 2016, a small business with $50 million or less in gross receipts may be able to claim the credit against alternative minimum tax (AMT) liability and use up to $250,000 of the credit annually to offset FICA tax.

Fast depreciation write-offs: IRS Form 4562 – A special tax law provision had allowed deductions over a fast cost recovery period of 15 years for qualified for qualified leasehold, restaurant and retail improvements. The normal write-off period is 39 years. Under the new law, the faster write-offs would be available for 2015 and thereafter.

Qualified small business stock (QSBS): IRS Schedule D – Investors in QSBS) could exclude 100% of the gain from the sale of the stock acquired before 2015. This tax exclusion was reduced to 50% for QSBS acquired after 2014. Under the new law, the 100% exclusion would be permanently restored, effective for stock acquired on January 1, 2015 or thereafter.

Key Extended Provisions

The following tax provisions are extended, for a period of two or more years, including the following:

Residential energy credits: IRS Form 5695 – The residential energy credit has existed in various forms over the years. In the latest reincarnation, a maximum $500 credit was available for 10% of qualified energy-saving expenditures like new heating and air conditioning systems. This credit would be retroactively extended from January 1, 2015 through December 31, 2016.

Mortgage tax breaks: In the past, homeowners could benefit from a tax exclusion for mortgage loan forgiveness on debts of up to $2 million. A separate provision permitted tax deductions for mortgage insurance premiums subject to a phase-out starting at an AGI of $100,000. Both tax breaks would be retroactively extended from January 1, 2015 through December 31, 2016.

Tuition-and-fees deduction: IRS Form 8917 – Taxpayers were previously able to deduct tuition and fees paid to a college in lieu of claiming a higher education tax credit. However, the maximum deduction of $4,000 was phased out based on MAGI. The deduction is retroactively extended from January 1, 2015 through December 31, 2016.

Bonus depreciation: IRS Form 4562 – This often-extended tax law measure enables a business to claim 50% “bonus depreciation” for qualified assets placed in service during the year. (Note that bonus depreciation may be combined with the Section 179 deduction in some cases.) The new law would retroactively extend 50% bonus depreciation from January 1, 2015 through December 31, 2017 before reducing it to 40% for only the next two years.

Work Opportunity Tax Credit (WOTC): IRS Form 5884 – Generally, a business could claim a maximum WOTC of $2,400 for hiring workers from specified disadvantaged groups (higher for certain disabled veterans). The WOTC would be retroactively extended from January 1, 2015 through December 31, 2019.