Will Someone Other Than You Receive Your Tax Return?

It’s that time of the year when many of us are waiting for our tax returns to arrive. But what if your tax return has already been sent and received… but not by you?

Filing your tax return can certainly be a stressful endeavor but imagine if you file your return only to be told by the IRS that your return has already been filed and your refund has been issued. But how could that be?

Well, according to an audit by the Treasury Inspector General for Tax Administration, the IRS paid out $3.6 billion in fraudulent tax refunds to identity thieves last year. Actually, the agency failed to prevent 1.1 million potentially fraudulent tax returns from being processed. This includes 5,500 fraudulent returns filed by a single tax preparer, for a refund of nearly $27 million, and a payout of $490,000 to an address in Bulgaria that was listed on more than 700 tax returns.

A new report by the Consumer Sentinel Network, a law enforcement coalition focused on identifying and fighting fraud, says that the nation’s fastest growing crime involves stealing Social Security numbers to grab your tax refund. Julianne Breitbeil, an Internal Revenue Service spokeswoman in Washington, D.C., says that “These are the most complex cases we have at the IRS and we have to make sure that we have the right taxpayer,” and that “In some cases, we’ve had perpetrators trying to tell us that they are the victim.”

This type of theft occurs in many ways, in some cases thieves use the taxpayer’s Social Security number and name to get their refund. Many times, there are crooked tax return preparers that file a return on a client’s behalf, but then steal the refund. In other occurrences, thieves use the taxpayer’s Social Security number, but use their own or a phony name. Often times they get around dealing with check cashing problems by having the refund loaded onto a debit card designed for people without bank accounts.

So how do you know if your tax return has been compromised?

IRS.gov tells us that usually, an identity thief uses a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund. Generally, the identity thief will use a stolen SSN to file a forged tax return and attempt to get a fraudulent refund early in the filing season.

Likely you will be unaware that this has happened until you file your return later in the filing season (another reason to file early) and discover that two returns have been filed using the same SSN.

The IRS advises us there is a good chance that you are a victim of identity theft if you receive an IRS notice or letter that states that:

More than one tax return for you was filed,
You have a balance due, refund offset or have had collection actions taken against you for a year you did not file a tax return, or
IRS records indicate you received wages from an employer unknown to you.

The IRS offers additional advice on what to do if your tax records were affected by identity theft:

If you receive a notice from IRS, respond immediately. If you believe someone may have used your SSN fraudulently, please notify IRS immediately by responding to the name and number printed on the notice or letter. You will need to fill out the IRS Identity Theft Affidavit, Form 14039.

For victims of identity theft who have previously been in contact with the IRS and have not achieved a resolution, you should contact the IRS Identity Protection Specialized Unit, toll-free, at 1-800-908-4490.

So how can you minimize the chance of becoming a victim?

Don’t carry your Social Security card or any document(s) with your SSN on it.
Don’t give a business your SSN just because they ask. Give it only when required.
Protect your financial information.
Check your credit report every 12 months.
Secure personal information in your home.
Protect your personal computers by using firewalls, anti-spam/virus software, update security patches, and change passwords for Internet accounts.
Don’t give personal information over the phone, through the mail or on the Internet unless you have initiated the contact or you are sure you know who you are dealing with.

If your tax records are not currently affected by identity theft, but you believe you may be at risk due to a lost/stolen purse or wallet, questionable credit card activity or credit report, etc., contact the IRS Identity Protection Specialized Unit at 1-800-908-4490.