The http://www.gao.gov/new.items/d11674t.pdf"> face="Arial">U.S. Government Accountability Office recently reported that identity theft rates have skyrocketed over the last three years. In fact, in 2010 alone, the IRS identified more than 245,000 identity theft incidents that affected the tax system. While those with tax problems caused by identity theft represent a small percentage of the expected 140 million individual returns filed, the overall impact – specifically on the individual level - can be quite serious.
The scariest part of these scandals is that there is absolutely no way for the victims to protect themselves. And even though the IRS has a special unit set up to assist taxpayers whose identities have been stolen, various laws make it difficult for the IRS to take any aggressive action.
For instance, the IRS can’t disclose any information pertaining to employment or refund fraud, such as the perpetrator’s identity or any information about the perpetrator’s employer. Even in criminal investigations, the IRS can share very limited information with federal investigators and even less with state and local authorities. Other than trying to protect their Social Security numbers from unnecessary disclosure, there is little that consumers can do to protect themselves.
The GAO said that the increase in identity theft cases was due to a couple major reasons:
- Legitimate taxpayers’ filings are flagged accidentally. This occurrence triggers the alert to the IRS because it appears as though a duplicate return has been entered into the system. As a result of the confusion, the processing of the return for the legitimate taxpayer gets delayed.
- When a fraud uses someone else’s Social Security number to get a job, it appears as though the victim has unreported income. That triggers a notice sent to the victim, telling them they failed to report all their income.
As mentioned earlier though, the IRS tries to help the victims much as possible, despite the lack of federal regulations. About 56,000">http://blogs.reuters.com/reuters-wealth/2011/05/27/irs-sees-staggering-jump-in-identity-theft-cases/">56,000 victims were assigned special personal identification numbers to further protect their returns.
To help prevent identity theft, watch out for the following situations:
- Record hacking
- Dumpster diving
- Stolen goods, such as a wallet purse
- Completing a change of address form to divert your mail
- Scams that ask you to reveal personal information via phone, a web form or email
So just remember, if all else fails, keep your identity close to you and don’t reply to any random e-mails saying you inherited a million dollars.