Identity Theft & Tax Fraud

Identity Theft

Tax Fraud

We’ve been dealing with a slew of clients who have been subjected to identity theft and tax fraud.  Given that governments, businesses, and sloppy personal practices have rendered it possible for people’s private information to be in the public domain, this is not surprising.

And, when it comes to taxes, if this affects you, it’s a terrible ordeal.  Starting with the fact that the IRS notifies you that you have already filed your taxes and they reject your submission.  (It could just as easily be your state tax agency, since some fraudsters find it easier to steal money from the states than the IRS.)   It then means you must file a paper tax return with an affidavit of identity theft.  And, if you were expecting a tax refund, it will be a long time in coming.  Not just because you filed via paper and not electronically, but because the IRS or state tax agency needs to verify what you just averred.  Given that the government (both federal and state) have been slashing their budgets, the number of employees available to work on your problem is limited.  And s-l-o-w.  (The IRS admits it can take 180 day or more- that’s 1/2 a year (6 months) for those of you who are mathematically challenged.)

It also means your bank account can be attached.  Because the tax authority may not believe you were not the fraudster.  And, they will, therefore, place a lien on your bank account or annuity or any other valuable piece of property to recover the funds they feel they are due.   We’ve had to deal with several such cases- and we’ve earned our fees! (We provide the ultimate in services at the most reasonable of fees.  But, these cases, in particular, require tenacity and foresight to deter the liens and where the agencies (including collection agencies on their behalf) may attach next.

One of the few methods that works if you’ve been subject to fraud (or had your social security number stolen) is to request a PIN number from the IRS.  [BTW, do you know that PIN means Personal Information Number?]  Note, however, once you do this, you will only be able to submit your tax returns via US Postal Service; no electronic filing is allowed if you need to add a PIN to your social security number.  

The other day, on the “fake snow day” in Virginia, we had the opportunity to see how WJLA, the local ABC affiliate in DC, has researched yet another avenue of fraud.

Here’s the link to the video:

They are reporting how easy it is to order fake W-2 and 1099 forms on the net.   It is amazingly easy to find folks willing to sell you fake, professional documents from tax forms to bank statements- for ridiculously cheap prices.  And, then use that information to file false tax returns using YOUR information (not your income, just your social security number- because they want the refund coming to them).

Caveat emptor!