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Subscribe to RSSAfter Meghan Bach learned last year that her husband’s identity had been stolen to collect a fake tax refund, she spent perhaps 200 hours working to resolve the issue with the IRS and other agencies.
She thought she had been successful until the family returned home from a vacation this month to find that her husband’s identity had been stolen again.
“It’s just appalling,” she said.
The IRS has acknowledged that identity theft tax fraud –- stealing someone’s Social Security number to file a fake tax return and collect a bogus refund –- is one of the most complex issues it deals with. Victims describe hours of phone calls, piles of correspondence and long periods of silence in which they aren’t sure whether their problems are being resolved or not.
The tedious process has left some victims worried about what will happen when they file this year’s tax returns.
“Of course I’m nervous,” said Dr. Vera Rosado, 33, who found out last year she was a victim and still has not been able to get it resolved with the IRS.
Rosado, a physician studying infectious diseases in Indianapolis, was recently told to file her fraud affidavit for a second time and her 2010 return for a third time after previous filings was lost. She said the IRS has told her it could take another few months to get the new paperwork processed.
She is waiting to get an approximately $3,000 refund check from last year’s return, which she plans to use toward medical board exams.
The IRS estimates 404,000 people were victims of identity theft tax fraud from mid-2009 to the end of 2011, and officials say the problem is growing.
The agency recently set up a specialized unit to just to deal with identity theft tax fraud, and it is expanding its screening process aimed at flagging this type of fraud. The issue also has attracted the attention of the some U.S. Senators. On Tuesday, a finance subcommittee held a hearing on the matter.
The IRS said it could not comment on specific cases such as Rosado’s and Bach’s because of privacy laws.
Experts say the IRS is working hard to root out identity theft tax fraud in the approximately 140 million tax returns that come in each year. But some believe the problem will get worse before it gets better because it will take time to train staff members to root out and deal with such issues.
“For the next four to five years it’s going to be a learning curve for everybody across the country,” said Jay Foley, a partner with ID Theft Info Source.
Foley said one issue is that IRS employees who aren’t part of the identity theft unit may not know how to handle such complaints. That’s why they might audit tax forms instead of use them in an investigation, for example, or not file paperwork correctly.
He recommends that anyone who is a victim of such fraud work directly with the identity theft unit and also contact the Taxpayer Advocate, an independent agency charged with assistant taxpayers who are having problems.
Foley said the bad news is that there is little people can do to shield themselves from such fraud attempts.
“There’s absolutely nothing that can be done at this point in time that’s going to give you a guarantee of safety,” he said.
Bach, a real estate agent who lives in San Diego, found out her husband had been a victim of identity theft tax fraud in March 2011, when she tried to file their taxes and learned that someone had already filed a return using her husband’s name and Social Security number.
Over the next year, she said she spent several hours each week working with the IRS and other government agencies to get the fraud resolved on behalf of her husband, a military doctor.
At one point, she sent the IRS summaries of her past 10 years of tax returns in order to prove that she and her husband were the true taxpayers. Instead, she said, the IRS audited one of those returns and presented her with a bill for nearly $900.
She paid that bill, then successfully contested a later IRS attempt to audit another past return she had provided to prove her family’s identity.
Eleven months later, the family finally got its refund for the 2010 return and she figured the issue had been resolved. But a few weeks ago, they returned from a Disneyland vacation to find letters from the IRS that had been addressed to her husband had instead been sent to an address down the street that had recently been used as a rental. The mail had been returned to the post office and redelivered to Bach.
One letter, sent to the other address, was informing the family that they had once again been victims of tax fraud for the 2011 tax year. The second letter said that a refund of more than $10,000 was being applied to an existing balance of more than $12,000 that the letter said the family owed the IRS.
Bach said the family had not yet filed their 2011 taxes and was not scheduled to receive a $10,000 refund for the year. They also did not owe the IRS any money – in fact, after their fraud had been resolved, she said the IRS had sent them a refund for 2010 with interest.
Bach surmises that the fraud might have occurred at the address where the IRS correspondence was sent. She doesn’t know if the IRS sent any other correspondence to that address.
Bach and her husband immediately went to the local IRS office to get the address issue corrected. In addition, she said she has left multiple messages with the IRS identity theft case manager she has been working with but has not heard back. She plans to file her real 2011 tax return this week.
Bailey Yahraus, 30, found out four years ago that her husband and young children’s Social Security numbers had been used to file a fraudulent return. The couple got it resolved, and for the next couple years they used a tax filing service to file their returns with no problems.
This year, Yahraus decided to file her return herself using an online tax service. That’s when she found out that her children’s Social Security numbers had already been used by someone else claiming them as dependents.
Yahraus, who lives in Montpelier, Ohio, has been trying to figure out how she can keep the Social Security numbers from being used fraudulently again. She’s worried about what effect the ID theft might have on her kids when they become adults.
But after a rough few years in which both she and her husband lost their jobs and got new ones, she hopes to shield them for now.
“They’re 8- and 9-year-old boys,” she said. “They’re worried about baseball, basketball (and) football.”
Related:
IRS faces surge in identity theft tax fraud
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My heart goes out to people who've been victimized. I too, have had my identity stolen and it took a while for me to get everything resolved. What I want to say is don't give up. Call the taxpayer advocate and work with them, they're great and also, keep good records. Get a receipt for everything and if you're going to use a tax professional, hire somebody who stands behind their work.
Peace and God's blessings to all this day.
Larry, if a person gets a fake social security card with a name that looks very real, an employer can hire them and pay them for a year and send in the W-2 information. IRS is intaking the W-2 and any withholdings. Some people have more than one job or change jobs periodically. IRS has no way to know that fake ID Cards and Social Security Cards were shown to the employer. It is not until tax time when two people claim to be the same person that they have this to deal with. You can't blame IRS (as much as we would like to) for the morals of those who steal from the rest of us. Problem needs resolving and pointing fingers is not as helpful as trying to figure out a way to stop the problem.
Our government gives tax refunds to people in prison, they give tax refunds to illegal aliens, They give tax refunds to people not even in this country, They give welfare to people in prison, they give welfare to illegal aliens, The give welfare to people not even in this country, And this is the same government that wants us to trust it to manage our health care, They want a central repository of all of our health care records which they say will make it easierfor doctors to access those records, The only people it will make it easier to acces those records will be the criminals.
A relative of mine passed away in September and therefore no quarterly taxes were filed for the last quarter of the year or the first quarter of the next year, The IRS sent a bill with fines and penalties for not filing for those quarters and warned of fines and penalties for the subsequent quarters, I contacted the IRS and advised them the relative was deceased and that the date of death was prior to the quarterly taxes being due, I also advised them that they had been sent a copy of the Death Certificate notifying them of the death before those quarters were due, The IRS said it did not matter that he was dead and that the estimated taxes still had to be filed and that the penalties and interest were still due, It took me several years to sort this out and the end result was that even though the person was deceased they still owed the penalties and interest for not filing the estimated returns even though there was no income earned for those periods.
The IRS does not care about little people like you or me but people like Geithner can get away without paying taxes for years and can even get a cushy government job.
i agree that penalties against the the person who committed the fraud should should be stiffer and more extreme than they are now. but in saying that i feel the govt., banks and other credit agencies need to take a stand on improving their security practices or this will continue.
These agencies need to take responsibility for their part in this problem, instead of just writing it off as a loss - which ends up hurting everyone. They take the easy way out.
I didn't get my social security number until I was 15 and got a job. It is unfortunate that we have to get our kids their number when they're born. Maybe it isn't worth it to claim the kids. Maybe it would be better to wait.
It seems that one way to curb the refund check theft is to require anyone who receives a refund, to pick it up in person, show proper ID, and provide a thumbprint. It's unlikely any thief is going to give his thumbprint. While it might be inconvenient for those receiving refunds, it will ultimately save billions of dollars.
Easy problem to solve....... Go back to paper checks with warnings to the person/bank cashing to demand a picture ID and thumb print. No govt issued picture ID..... sorry.... no cashee check until you get picture ID. When the banks have to make good on ID Theft, they will double up on their check cashing procedures.
There is a way to cure this problem, DON'T SAVE YOUR MONEY WITH THE GOVERNMENT. Adjust your w-4's so you break even or maybe even owe a little bit. Then there is nothing to steal. So what if the government has to wait to get paid. That's there problem.
It seems to me that paid tax preparers have become very popular and that most people who use them are overwitheld. Then the taxpayer gets psychological credit from their customer for getting them a large refund.
Am I correct that the IRS only accepts online/web tax returns from or through commercial tax preparers? If so that is sort of a government subsidy for the tax preparer business.
Punishment for those who steal money by identity fraud or "ID theft" should be as high as punishment for any other type of theft,fraud,forgery or embezzlement.
If private individuals were allowed to file tax returns online directly with the IRS without a second party (paid preparer) it might become possible for the taxpayer to set up a private username and password with the IRS such that no one else would be able to file a false tax return using that account. At least not online.
Perhaps there is too much emphasis on having fast refunds of overwitholding. At least witholding needs to be confirmed before refunds are made.
"taxpayer" on the second line should be "paid preparer"
David, I think the IRS doesn't have the capability to have software that an individual can use to file their return. As silly as it may seem, the amount of tax law + calculations behind the tax return require a staff to answer questions and a staff that can keep up with the different laws to make changes to the software. With my firm, the software we use is about $7500/year plus additional expense to file state returns. It's very costly. I work for a very small firm. When I worked for a Big 4, their software was in the hundreds of thousands each year. That would be an additional burden for the IRS (passed on to me and you). They provide the forms and it's your responsiblity to read the code and file the return. If the IRS interpreted the code for you then there is a conflict of interest as well. I'm an accountant, not an attorney, so I don't know the extent of a conflict, but I don't think I would be too happy about the place taxing me interpreting the laws for me as well in the software they provided.
Also, I would avoid anything that offered a "fast refund". Your refund should take 2 - 3 weeks, anything sooner is a rip off.
Identity theft is least of our governments worries. Most of the identity theft is from illegals & no one wants to actually enforce the laws that would keep the illegals out because they want the minority votes. This will never be fixed until our politicians actually start working for the people & not themselves.
This whole identity theft financial mess is created by lenders. they set their own guidlines for identifiyng applicants before approving all types of loans. When they fail to properly identify who they are lending to, it becomes the victim of idenity theft who pays the price. I've requested on several occasions that I should be contacted at my home phone number before any credit is approved under my name. The credit agencies flat refuse, unless you are a current identity theft victim. They make it near impossible to prevent idenity theft, then the entire system holds YOU accountable for the lenders failure to insure who their borrower actually is.
If you track down the person who stole your identity and kill them, does that mean you can't be convicted because you are technically dead? Just a thought.
Paying money to the wrong person is the IRS' problem, factually and legally. Taxpayers are not responsible for their screw-ups. They have many just like every other federal agency; 404,000 in this case. This is just one type of notice.
It is time taxpayers unite and let this and other federal agencies know taxpayers, not the government nor its bureaucracy, are the boss. They need to respect those who are paying their salary, or they need to be shut down. The later is most equitable and favorable.
The fed.gov hasn't figured out how to make a profit in more than 225 years. Time to pull the plug on failed business as usual system.
Like Gandhi, equal rights for everyone except journalists and politicians... and government.
Don't give the government free use of your money. Just don't overpay the government and you will not get a tax refund. A saving account with ZERO interest is no deal.
Stop having refunds. Eliminated earned income tax credits. Make income tax withholding optional without penality. Then there is no money to steal.
Here is a good idea. The IRS took my 2010 refund and won't return it. One of their employees told me it would probably happen with my 2011 refund. I am going to change my withholding so I owe money in 2012.
The IRS is the core of the problem. Crooks have learned how easy it is to take advantage of really stupid IRS practices, leaving the rest of us as goats.
A lady at the IRS phone number I called told me to file a police report. I never thought of that so I AM going to file a report.
"THE IRS STOLE MY MONEY AND WON'T RETURN IT."
Deliberate ID theft should be a death penalty crime. Anything less is just playing.
Thanks, Uncle Sam, for assigning us all Social Security numbers at birth so that we may have our identity easily stolen.
How can I opt out of this again? Oh yeah: "Land of the free...land of the free..." Keep repeating it, citizen.
Find these thieves and cut off their hands to prevent the use of keyboards for fraud ever again....but then fire the people that thought opening up this lax of a system that allowed this to happen. Only the government could screw up this bad and stay open. Any business would have folded years ago if it acted so carelessly.
Find these thieves and cut off their hands to prevent the use of keyboards for fraud ever again....but then fire the people that thought opening up this lax of a system that allowed this to happen. Only the government could screw up this bad and stay open. Any business would have folded years ago if it acted so carelessly.
What is a joke is they refuse to do anything about the illegals that arre using the ID and filing. All they care about is getting them the next vote.
If you or I had taken a stolen ID we would be prosecuted to the full extent of the law. The illegals claim that they do not know that it is a "bad" thing to do. I am only here to work hard for my family!!!! When they get caught stealoing form stores--I only do it for my family!!! And usually they get by with it. You aor I would be under the jail.
Until a member of congress has theirs stolen nothing will happen. Until the people that are selling us down the road to line thier own pocketws runs into trouble we will have this kind of problem. Also it is not just the republicans or the dems. it is both sides taking as much as they can for themselves as enough is never enough for them. Until this country is a dump third world nation they will not be happy.
The politicians are so far removed from real everyday life they could care less. They look at us like the "rabble" and continue to say do as I say not as I do.
If everyone changes their withholding so they are owed money at the end of the year, the gubment won't have free use of our money for a year. The US Treasury folks will start realizing the pinch when they start running billions behind on tax collections and they might start to devote more attention to fixing this problem. NAH!!! Government fix a problem? They will just create some other problem for us.
We have 12 million illegals in this country and people act surprised that identity theft is on the rise? LOL.
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Back when it was illegal to use SSN for any type of identity purpose we were protected from most types of identity theft. But the banking industry wanted to have BIGGER banks and not have to be chartered in each state individually. They wanted to increase their profits by having simpler ways to track us. So they got laws changed to allow banks to be nationwide and the SSN to be used universally as an identifier. All we need to do to end identity theft is to make use of SSN as any identifier illegal. Banks would not be able to use it in their computer systems and then when folks got your number it would not be the Abracadabra to be able to link all your financial transactions. We would also do well to restrict banks to single state operations thereby doing away with any bank being too big to fail.
Yes, it would be a terrible loss of profit for the banking industry. So what's the downside?
IRS = Gestapo = Always Right