Last year, more than 875,000 taxpayers were victims of tax identity theft. Identity thieves have capitalized on the filing of phony tax returns to gain access to millions of dollars of fraudulent tax refunds by using the names, social security numbers, or W-2 information of unsuspecting taxpayers. Tax identity theft wreaks havoc on the lives of the victims in that it:
- Compromises sensitive taxpayer information and that of their dependents
- Creates long waits for refunds
- Expends significant time and financial resources to resolve the issue
The IRS had previously offered remedies to alleviate the risk of these fraudulent returns, including making internal technology improvements and issuing PINs to those taxpayers who were previous victims. In response to demand, the IRS recently announced that the agency has agreed to release copies of the fraudulent returns to the victims. The offering of these returns will help the victims understand what information was compromised so that they can more easily take corrective measures. The IRS has promised to publish procedures for the request of copies of the fraudulent returns.
Tax identity theft is also on the rise for states. In an effort to thwart attempts to steal $230 million in bogus refunds, the Ohio Department of Taxation upgraded its fraud detection processes. Prior to the 2015 filing season, the Department added up-front filters for tax returns and implemented an online Identification Confirmation Quiz for selected refund requests.A taxpayer who suspects that he or she is a victim of tax identity theft should:
- File a report with local law enforcement
- Report the theft at ftc.gov/complaint
- Obtain recent credit reports to investigate unusual activity
Contact the IRS at 1-800-908-4490If you have questions about identity theft, or wish to know more about how Barnes Dennig can help protect your organization from identity thieves, contact a representative here.