4/10/2013 8:30 PM ET|
When tax fraud won’t go away
The only thing worse than fighting tax-related identity theft is having to fight it over and over again.
Tax season used to be simple for David Parker. His accountant electronically filed taxes for his businesses and investments, and the refund arrived promptly in the mail.
But in the past few years, fraudsters have hit Parker again and again, despite IRS efforts to resolve the problem.
Parker is among a growing number of taxpayers who are becoming repeat victims of tax-related identity theft. "It's a pattern we're seeing on the rise," said Brett Montgomery, who helps resolve identity fraud cases for Identity Theft 911. "The IRS investigation process takes so long to run its course, that victims are getting hit year after year. It's a vicious cycle."
The IRS has 210 days to contact victims after they submit a fraud complaint. If a refund or a letter of intent isn't issued at that time, victims can petition for a referral to a case manager. The first referral request has a 45-day window. If victims don't receive a response, they can request a second referral, which has a 30-day turnaround time. The third referral has a 10-day window.
That means some victims can go as long as 300 days without hearing from the IRS.
"There is almost nothing the taxpayer can do to speed things along," said Vicki Volkert, a fraud investigator at Identity Theft 911. "And once you are working with the IRS to address the fraud, if something fails along the way — if the taxpayer's record isn't updated with the correct address, for example — it can derail the whole process. Anything missed can create another problem."
In Parker's case, his personally identifiable information (PII) was stolen when there was a break-in at his insurance broker's office. He suspects that fraudsters used his PII from that event to file a fraudulent return before he filed in 2010, and a refund was sent to the thieves. It happened again in 2011, although the IRS had assured Parker otherwise because his account was flagged. When he tried to resolve the matter on his own, he had difficulty reaching two case workers assigned to him. They didn't return his voicemail messages. Every time Parker contacted the IRS, he said, "It was like starting all over again."
Because it was a case of double-trouble fraud, it required immediate and drastic measures. Parker's credit files were flagged with a seven-year fraud alert, to tell creditors that he was a victim of identity theft and to verify with him all applications for credit. He also did the following:
- Filed a police report
- Filed an affidavit of identity fraud with the U.S. Department of Commerce
- Contacted the Social Security Administration to correct his earnings statements
- Contacted all three credit bureaus
- Filed a fraud alert with the National Banking Service
At some point, the IRS claimed that Parker owed them $4,300. "That was the real kicker," Parker said. "That was the amount, with interest, that they wrongfully refunded to whoever stole my identity."
Ultimately, Parker got in contact with a public tax advocate, who finally got Parker's name — and tax record — cleared. His problem took a year and half to fix.
Though it could create procedural challenges for the IRS and the U.S. Postal Service, Parker suggested that Congress could solve the problem by simply refusing to issue refunds before April 15. That way they could see who has duplicate returns filed, and investigate before signing over checks to the bad guys, he said.
In the meantime, Volkert suggests victims of repeated fraud file their taxes early — in January or February — to beat criminals to the punch. Procrastinating on your taxes gives thieves plenty of time to pick their targets.
Taxpayers who suspect they may be victims of tax-related identity theft are encouraged to call their providers. A bank, credit union, insurance company or membership organization may provide free identity management services.
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why is it that the victims of this stuff have to go through the process of trying to solve their own case?... why doesnt law enforcement do their job?... because there is no money in it for the government
the IRS is incompetent as far as this subject is concerned
why arent the banks and lending agenies responsible for distributing their money to the wrong people?
what happened to proper identification procedures?
this only goes to show that we are nothing but a number to the government
we are as fed cattle on a ranch, complete with tags identifying us all to the rancher (government)
they OWN us...
Here's a thought, change your withholdings so you are not due a refund. Maybe the thieves will pay what you owe...
Perhaps a more pragmatic approach would be for the IRS to issue an associated PIN access code associated with your SSN. At least the thieves would have to steal that as well and if so you could always change it if it ever got compromised.
Geitner floated to the top...along with 40% gov employees not paying tax or their student loans.
What a nation: the private sector workers being responsible are SLAVES to TRAITORS WITHIN...not for long.......
Our tax system is so complicated and intrusive as to be almost completely gibberish. That level of complexity is probably deliberate so as to insure that no one is quite sure just what the government is doing to us. In addition to that questionable practice there is the business of keeping untold numbers of otherwise useless people (accountants and tax preparers) employed. I think we could solve most, if not all, of the problem by going to a flat tax system. That would probably make too much sense for our government though.
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