Identity Theft-Proving a Tough Foe for IRS

Most information dispensed last week was designed to give tax help to last minute filers attempting to complete their tax returns. But news agencies including the IRS are now busy reporting on a new tax story about how rampant IRS identity theft issues are for the Agency itself. Even after the filing deadline, taxpayers are asked to remain vigilant against these tax fraudsters who continue to dupe ordinary citizens. Here are some of the stories in this week’s news.

A Reuters article entitled Tax Refund Schemer Stole 300 Identities reported on the recent prosecution of 12 people accused of a tax refund scheme that stole the identities of 300 people mostly unemployed taxpayers to collect refunds using their information.

The IRS posted an Identity Theft video determined to prevent, detect and resolve identity theft. This video informs taxpayers the need to stay alert for correspondence especially from asking for personal information. IRS slogan: “Your best defense is a good offense.”

The video’s advice is common sense based to avoid tax problems, but identity thieves are clever especially online and often approach taxpayers through a realistic looking webpage stating they are from the IRS.

Here are some strategies the IRS suggests:

Protect Personal Information: your social security card, leave in a safe place not your wallet in case it gets stolen.
Only give out your social security number when absolutely necessary.
Online: be careful about sharing personal information.
Shred paper documents and check financial accounts regularly for unusual activity.
Make sure you file financial documents in a safe location.

IRS Reminder: The IRS does not send e-mails out of the blue asking you to share financial or personal information. Taxpayers receiving any such e-mails are to report them to the IRS immediately. Do NOT do the following: Click on any links or respond to that e-mail with any personal information.

Bloomberg News’ Richard Rubin reported on Russell George, the IRS inspector general and his meeting with a U.S. House of Representatives subcommittee that resulted in his admission of the identity theft issue and how these criminals are filing returns with other people’s identities in order to receive tax refunds…”at alarming rates.” The total amount of identity theft is large and its numbers unknown.

According to the article, George cited the following 2011 IRS data:

IRS Detected about 940,000 tax returns involving identity theft
Stopped $6.5 billion in refunds from being issued.

IRS deputy commissioner Stephen Miller told the House panel that identity theft progress has been made by giving PIN numbers to the roughly 250,000 taxpayers with prior identity theft cases so they can authenticate their identity to the IRS. This bit of IRS tax relief doesn’t go far to prevent new cases. Nina Olson, the national taxpayer advocate critical of IRS processes believes tensions exist between the IRS’s goals of processing tax returns quickly and stopping fraud but believes that they will eventually be forced to find a way.

An Accounting Today article takes an in depth look into the House hearings and issues such as the IRS’ use of Identity theft filters which were blamed for refund delays this tax season.

A previous blog post shows just how realistic the appeal of tax scammers can be. Cautionary tale: the IRS holds you responsible for information provided to the IRS and will come after you for payment, no matter what. Prevent IRS tax issues; make sure your tax account is clean.

More Tax Help, IRS News and Tax Relief Tips:

Tags: FALSE TAX RETURNS, filing false federal tax return, Identity Theft, IRS enforcement, IRS help, IRS identity theft, IRS tax issues, irs tax relief, Nina Olson, tax help, tax problems, tax relief, Tax Tips