In recent years, identity theft committed by filing fraudulent tax returns has come into stark focus, but some experts say the Internal Revenue Service still doesn’t do enough to protect Americans.
The amount of tax-related identity theft nationwide has surged and a new report from the National Taxpayer Advocate says the IRS may not be doing all it should to prevent these crimes from happening. Between 2008 and 2012, this type of fraud has increased 650 percent, affecting more than 650,000 people.
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The problem for many consumers is that until the IRS is able to determine that a refund was issued to another person through fraudulent means, it does not pay the rightful recipient their refunds, the report said. At issue is the fact that more than 75 percent of taxpayers are due returns every year, and the average payout amounts to about $3,000, which can be a big help to many families. Currently, the IRS tells people who believe they have been victimized by this type of crime that their case will be resolved in about six months, and cases with any amount of complications will take longer than that.
The report suggests that one thing that might help ease the process for the nearly 55,000 people who suffered this type of crime during the 2012 fiscal year is for the IRS to implement rules that make it easier for potential victims to deal with the problem. The current setup forces them to deal with multiple people in more than one department.
“Taxpayers need ‘one-stop shopping’ — a single point of contact they can work with to resolve all issues in their cases — and the IRS needs a ‘traffic cop’ to make sure that all units complete their actions and that parts of cases do not fall through the cracks,” said National Taxpayer Advocate Nina Olson. “And six months is an unacceptable period of time to expect taxpayer-victims to wait.”
The IRS has been trying to attack the problem, but ID theft has grown exponentially each year, said Raul Vargas, an identity fraud resolution expert with Identity Theft 911. He says that stopping the fraud before a payment is even issued can help stem the tide of crime.
“In order to protect taxpayers, the IRS must make adjustments to its process prior to paying out a return,” Vargas said. “The IRS needs a two-step approach to stop the massive influx of incoming fraud and while resolving the existing claims in a more timely manner.”
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Identity theft is obviously a serious problem that can affect many consumers, but the best way for Americans to determine if their taxes are involved in such a crime is unfortunately to simply wait for their return to either come or not. If not, it’s likely they have been hit by an identity thief who used their personal data to file a fraudulent claim.
Image: Ray Tsang, via Flickr