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Taxpayer ID theft on the rise

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posted on Jul, 23 2012 @ 12:40 AM
A recent report by the Treasury Inspector General for Tax Administration (yes, that outfit does exist !) has revealed some alarming trends and suggests that the IRS is having trouble sorting out I.D. theft concerning fraudulent tax returns.

People who are victims of tax return fraud by third parties are often strapped down by the IRS and it often takes years to resolve !!

The report says that confirmed tax fraud I.D. theft cases were 270,518 in 2010.

2011 however saw that number skyrocket to 641,052 !!

The numbers could in fact be much higher because of tax returns filed fraudulently often involve "victims" who are not required to even file a return, hence nobody is the wiser.

The story does not mention how much this is costing, but we can be sure it's astronomical.

Reuters -- July 19, 2012

NEW YORK, July 19 - Call it one more unintended consequence of our complicated income tax system: U.S. taxpayer identity theft is rising, and if your identity is snatched, you can expect a long and tortuous process before you are made whole.

In 2011, some 641,052 taxpayers were affected by identity theft, more than double the 270,518 the previous year, according to Internal Revenue Service statistics cited in a recent report by the Treasury Inspector General for Tax Administration (TIGTA). Nearly 16,000 taxpayers complained of problems related to identity theft to the Taxpayer Advocate in the first half of fiscal 2012, a 57 percent increase over the previous year.

The problem -- which can make taxpayers' lives miserable and costs the U.S. Treasury significantly -- has become so big that Taxpayer Advocate Nina Olson has identified it as one of the biggest problems, while the House Judiciary Committee held a hearing on the topic on July 10.....[continued]

Taxpayer ID theft on the rise

from the TIGTA report itself;

Final Report issued on May 3, 2012

Highlights of Reference Number: 2012-40-050 to the Internal Revenue Service Deputy Commissioner for Operations Support.


The Federal Trade Commission reported that identity theft was the number one complaint in Calendar Year 2011, and government documents/benefits fraud was the most common form of reported identity theft. As of December 31, 2011, the IRS’s Incident Tracking Statistics Report showed that 641,052 taxpayers have been affected by identity theft in Calendar Year 2011. The IRS is not effectively providing assistance to victims of identity theft, and current processes are not adequate to communicate identity theft procedures to taxpayers, resulting in increased burden for victims of identity theft.


This audit was initiated because the number of identity theft cases in the IRS has grown significantly over the last few years, overwhelming IRS resources and burdening taxpayers. Taxpayers testifying before Congress stated that they had to talk to multiple IRS employees and were provided conflicting instructions.


Identity theft cases are not worked timely and can take more than a year to resolve. Communications between the IRS and victims are limited and confusing, and victims are asked multiple times to substantiate their identity.

When taxpayers call the IRS to advise it that their electronic tax return was rejected because it appears another individual has already filed a tax return using their identity, the IRS instructs them to mail in a paper tax return with the Form 14039, Identity Theft Affidavit, attaching supporting identity documents. However, the IRS has been processing these tax returns using standard processing procedures.

Identity theft guidelines and procedures are dispersed among 38 different Internal Revenue Manual sections. These guidelines are inconsistent and conflicting, and not all functions have guidelines on handling identity theft issues.

The IRS uses little of the data from the identity theft cases to identify any trends, etc., that could be used to detect or prevent future refund fraud. ................

The Gov't report here

I wonder who makes more money off this.....

the "crooks" or the "investigators" and "prosecutors" ??

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