Thieving Your Tax Returns and What You and the IRS Can Do About It

by

Among the Top 24 Taxpayer Problems of 2015, as recently put out by National Taxpayer Advocate Nina Olson, who heads the Taxpayer Advocate Service (TAS), an independent office within the IRS that helps taxpayers and protects taxpayer rights, perhaps the scariest and yet most promising concern is Number 16: Identity theft.

Tax Return Identity Theft

 

Identity theft isn’t just media-sexy or trendy, it’s real. As stated in Olson’s report, “tax-related identity theft (IDT) occurs when an individual intentionally uses the personal identifying information of another person to file a falsified tax return with the intention of obtaining an unauthorized refund. Identity theft victims must substantiate their identity with the Internal Revenue Service (IRS), file various forms, and wait months or even years to receive their tax refunds and unwind the account issues.”

While Olson praised the IRS’ recent revamp (a centralized approach), “the National Taxpayer Advocate remains much more concerned with the IRS’s IDT victim assistance procedures than she is with the organizational structure of the IDT victim assistance unit.”

And the number of victims continues to grow. At the end of September 2015, the IRS had more than 600,000 identity theft cases affecting taxpayers (excluding duplicates), an almost 150 percent increase over 2014.

Olson’s recommendations, with which we here at Integrity concur: expand the Identity Protection PIN availability nationwide, appoint one contact person and a direct phone line for identity theft victims with multiple issues, revamp account reviews so that all issues are resolved before a case is closed, and train employees to deal with identity theft.

To its credit, the IRS has implemented new safeguards for 2016 and has also launched its own anti-tax return identity theft campaign: Taxes. Security. Together. (This, despite the major gaffe wherein the agency sent out IP PINs dated for 2014 instead of 2015. These special PINs are for taxpayers who’ve had their identities stolen; last year alone, the IRS issued more than 1.2 million of the special filing numbers.)

Some T.S.T. anti-tax return identity theft suggestions:
Always use security software with firewall and anti-virus protections. Make sure the security software is always turned on and can automatically update. Encrypt sensitive files such as tax records you store on your computer. Use strong passwords.
Learn to recognize and avoid phishing emails, threatening calls and texts from thieves posing as legitimate organizations such as your bank, credit card company—even the IRS. Do not click on links or download attachments from unknown or suspicious emails.
Protect your personal data. Don’t routinely carry your Social Security card, and make sure your tax records are secure.

And if you have had your identity stolen, the IRS has also provided some psychological if not exactly practical relief by making available (sort of) a copy of any return that was illegally filed under your name and Social Security number.

More an awareness campaign than anything, T.S.T. still has some useful, if common-sense suggestions. And it’s a campaign we here at Integrity appreciate because the agency has taken the unusual step of including tax experts like ourselves and others in the tax industry in its efforts to protect your federal and state tax accounts from identity thieves.

“Tax preparers,” as the IRS’ T.S.T. document pointed out, “are critical and valued partners in the tax administration process, and they have an important role to play in helping prevent identity theft.” Yes we do.

Yes. We. Do.