“Income tax identity theft is a huge problem that is only getting worse.”
According to a 2015 report of the General Accountability Office (GAO), the IRS paid out $5.8 billion in bogus refunds to identity thieves for the 2013 tax year–the latest year that complete data are available. To make matters worse, the actual dollar amount is probably higher because of the difficulty of knowing the amount of undetected fraud.
To combat the problem, the IRS announced a new cooperative effort between the IRS, state tax administrators, and private tax preparation services to fight income tax identity theft. A number of specific steps are outlined in this article. Unfortunately, the experts admit there are additional problems to stopping identity thieves that are not addressed in the new program. In fact, most experts agree that additional regulations are required to coordinate employer reporting of employee wages with Social Security reporting requirements.
For individual taxpayers, bogus tax returns become a very real and personal problem if their social security number is stolen and their personal tax return is flagged by the IRS as suspicious. To help resolve disputed tax returns, the office of the National Taxpayer Advocate, which is an internal watchdog for consumers at the IRS, suggests that you file a police report and then mail a paper tax return with an attached Form 14039–Identity Theft Affidavit with a copy of the police report. In addition to additional documentation, expect that it may take on average 278 days to resolve a claim if you become a victim of income tax identity theft.
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You may want to use the information in this blog post and the original article to
- Discuss the importance of protecting your personal identity and especially your social security number.
- Stress the importance of monitoring your credit report and all financial documents that could indicate your personal identity has been stolen.
- What steps can you take to protect your personal identity?
- There are a number of credit monitoring services that will help protect your identity. Most charge $75 to $100 or more a year to monitor your financial and personal information. Do you feel this service is worth the cost?