Taxpayer Identity Theft on the Rise

The old adage, “no news is good news” is often true. But for the hundreds of thousands of taxpayers who waited for refund checks to no avail, chances are, they’d beg to differ. If you were one of the many victims whose tax refund ended up in the wrong hands due to identity theft, sadly, you weren’t alone. For tax year 2010, the Government Accountability Office reported over 248,000 fraudulent cases, as written in a recent article by the Associated Press. Compared to the 51,702 cases detected in 2008, taxpayer identity">">identity thefts are on the rise. 


After making rounds of repetitive phone calls to the IRS, an identity theft victim from Pennsylvania called the process “a nightmare.” And despite her efforts was told to wait 16 weeks to 6 months before the case could come to full resolution. Another, who testified to being victimized in both 2009 and 2011, declared the agency to be “unequipped” with “no clear process in place to prevent this from happening.” 


The GAO and other officials are strong-arming the IRS to settle the problem and question why the matter is getting worse. "By bringing these issues to the public as quickly as possible,” said Rep. Todd Platts, R-Pa., “the committee hopes to give citizens the necessary information so they can protect themselves from such identity theft.” In a testimony given during the hearing, Doug Shulman, the IRS commissioner, defended the agency revealing that more than $900 million in fraudulent returns were detected, maintained, and undistributed to unauthorized parties.  


Nonetheless, Shulman points out that while their efforts are a step in the right direction, prevention starts outside the IRS. “I want to emphasize that, by the time we detect and stop a perpetrator from using someone else’s personal information for his own benefit, the taxpayer-victim’s personal data had already been compromised outside the tax filing process.” Putting the pressure on income tax preparation offices and taxpayers alike, what measures should be taken to stop identity thieves in their tracks?  


If there’s any indication that you’ve been subject to theft, have your tax preparer check the system to confirm if a return was previously filed under your Social Security Number. Returns submitted early in the filing season can also be a red-flag warning, and only upon receiving two returns from the same party is the IRS made privy of the matter. Your personal information can be obtained a number of ways, and reporting any lost, stolen, or suspicious emails will play an important role in reducing future cases. For further information, the IRS has a list of other tips,,id=202865,00.html">tips> displayed on their website.