Tax Identity Theft: Nonprofit Used My SSN for Merchant Payments - IRS Demanding Payment

Thank you for the detailed steps. I actually tried calling the IRS a few times but kept getting disconnected after waiting for hours. Is there a better time of day to call? Also, for the Form 14039, should I include copies of my communication with the organization as evidence? Another question - will filing the identity theft form stop the current collection actions against me while it's being investigated?

Early morning (right when they open) is typically the best time to call the IRS, ideally Tuesday through Thursday as Mondays and Fridays tend to be their busiest days. Yes, absolutely include any documentation you have showing the organization acknowledged using your SSN inappropriately. This includes emails, texts, or written statements where they admitted to the error or promised to correct it. The more evidence you have, the better. Filing Form 14039 will flag your account for identity theft review, which can pause some collection activities, but it's not guaranteed to stop all actions immediately. You should also request a Collection Due Process hearing using Form 12153 if you've received an intent to levy notice. This gives you more formal protection while you resolve the issue.

How exactly does that work? Do you upload your tax documents to them or something? I'm dealing with a similar issue where my ex-employer filed 1099s using my SSN for payments that actually went to their business account.

Sounds sketchy tbh. Why would you trust sending your tax docs and SSN to some random website? The IRS has free resources for identity theft.

You upload your IRS notices, tax returns, and any relevant documents through their secure system. They use AI to analyze everything and identify discrepancies. In my case, they found reporting patterns that showed clearly the income wasn't mine. I was skeptical at first too, but the IRS resources weren't helping me make sense of the complex paper trail. Their system is encrypted, and they don't store your documents after analysis. What made it worth it was getting a clear explanation of exactly which forms were filed incorrectly and what specific paragraphs of tax code applied to my situation.

How does that even work? The IRS phone system is a nightmare, I've tried calling at least 10 times about my audit and never got through. Sounds too good to be true.

Yeah right. Nobody can get through to the IRS. Their hold times are literally hours, and they hang up on you half the time. If this actually worked, everyone would be using it.

It works by using specialized dialing systems that can navigate the IRS phone menu automatically and stay on hold indefinitely. When they reach a human agent, they conference you in. They're basically professional line-waiters. I was totally skeptical too. I'd already wasted about 8 hours on multiple calls trying to reach someone about my identity theft case. The service costs money, but it was worth it to actually talk to someone who could help instead of getting disconnected after waiting for hours.

This is exactly what I've been wondering. Beyond just getting my tax situation fixed, can I sue them for damages? The stress this has caused has been unbelievable. I've had trouble sleeping, my credit score dropped, and I've spent countless hours trying to fix this mess. Would small claims court be appropriate, or should I look for an attorney who works on contingency?

This case is too complex and the damages potentially too large for small claims court. You need an attorney who specializes in tax identity theft or financial fraud. Many attorneys in this field will offer a free initial consultation. The damages you could pursue include: all tax penalties and interest, compensation for credit damage, costs for credit monitoring services, time spent resolving the issue (calculated at a reasonable hourly rate), and potentially punitive damages since their actions appear willful rather than accidental. Some states also allow for statutory damages for identity theft. I'd recommend contacting your state bar association for a referral to attorneys specializing in identity theft or tax fraud. Look for someone who has experience specifically with business-related identity theft, as this is more complex than typical consumer identity theft cases.

I was strictly a volunteer. I helped at events and occasionally assisted with marketing materials, but I was never an employee, never received compensation, and had no financial authority or access to accounts. I was not an officer or board member. I just let them use my SSN temporarily to set up the Square account when they were in a rush one day, with the explicit understanding that they would immediately change it to their Tax ID.

That makes this WAY worse from a legal perspective. As someone with nonprofit experience, I can tell you that what they did borders on criminal fraud. Nonprofits have EINs (Employer Identification Numbers) specifically for financial transactions. There is NEVER a legitimate reason to use a volunteer's SSN for merchant processing.