Thread: IRS warns of identity theft, tax fraud

IRS warns of identity theft, tax fraud

January 29, 2012 9:59 PM
By ILDEFONSO ORTIZ/The Monitor

Maria Rojas held her W2, waiting to file her taxes at Jackson Hewitt Tax Service center. The recent trip to the office in her local Walmart would take her a step closer to a much-awaited refund check.

Like many taxpayers in the Rio Grande Valley, Rojas is not very familiar with the tax code, so she goes to the professionals.

"There are lots of places where they advertise the taxes, but I just go here because it’s convenient and I know it’s safe," Rojas said.

It’s no wonder safety is on Rojas’ mind these days.

While filing her taxes five years ago, she was notified by the Internal Revenue Service that someone else had already filed an income tax return under her name.

Rojas had become a victim of identity theft.

In recent years, the IRS has seen a significant increase in refund fraud and identity theft, according to testimony that Steven Miller, the agency’s deputy commissioner for services and enforcement, gave in November before the U.S. House Committee on Oversight and Government Reform.

The government is hurt by individuals using stolen information to file fraudulent refund claims, while victimizing innocent taxpayers by impeding their ability to file or receive a refund, Miller said.

Additionally the taxpayer may be adversely affected if the IRS initiates an enforcement action involving the fraudulent refund. For instance, if a Social Security number is stolen, an imposter may use it to get a job, and the imposter’s employer may report that income earned to the IRS under the stolen number. That could lead the IRS to believe that the victimized taxpayer hadn’t fully reported his or her income, prompting the agency to take action.

Since 2008, the IRS has identified more than 404,000 taxpayers who have been affected by identity theft, according to information released by the IRS. But the agency can’t inspect 100 million tax refunds individually to ensure all are correct.

Preventing and investigating identity theft and fraud will be one of the IRS’s top tasks — one for which the agency has partnered with local law enforcement and other federal agencies, Miller said.

In 2011, the agency disrupted $1.3 billion in refunds from being erroneously given to identity thieves.

The IRS has begun new procedures to flag suspicious returns, Miller said, and it has begun issuing new identification numbers for identity theft victims in order to facilitate their returns and to keep others from filing future returns in their name.

The IRS continues to task its Criminal Investigations Division with detecting and investigating tax and other financial fraud.

Some of the notable cases investigated by the agency last year include:

>> A woman from Ohio who was sentenced to 6½ years in federal prison after filing 140 false returns using stolen information.

>> A North Carolina man who worked for a U.S. government data warehouse and was convicted of stealing information to file several fraudulent returns. He was sentenced to 11 years in prison.

According to the IRS, telltale signs of identity theft include having more than one tax return, having a balance due or collections taken for a year where the taxpayer didn’t file a return, or having IRS records show that the person received wages from an employer that is unknown to the person.

To prevent identity theft, individuals shouldn’t carry their Social Security card or any document bearing the Social Security number, according to information released by the IRS. Additionally individuals should check their credit scores at least once a year to identify any irregularities.

Those who file their own taxes using e-file should burn the forms to a removable disc — like a CD or a flash drive — and delete the files from the computer’s hard drive.

Victims of identity theft should notify the IRS as soon as possible and file an Identity Theft Affidavit so the agency can begin working with the victim and take the appropriate measures.

Rojas was able to contact the IRS to get her tax problems squared away. If all goes well, this year she will receive not only her tax refund check, but also a little extra money from the Earned Income Tax Credit.

Though she still relies on the knowledge of specialists to help her navigate the law when tax time rolls around, there’s one lesson she has learned all too well: to keep an eye on her legal documents.

IRS warns of identity theft, tax fraud | tax, file, taxes - Brownsville Herald

In my area, cleaning crews were stealing social security numbers and other information from doctors' offices. Those on Medicare and Medicaid have their social security numbers on insurance cards. Private insurance companies stopped doing that years ago, but the government still puts people at risk.