Identity theft can happen to anyone, and be detrimental to your credit score and your financial well-being. One method of identity theft is filing a tax return under another name and SSN to claim the refund. Because of this, tax season is a time to be especially aware of your finances. Fortunately, the IRS is also very aware of this fact, and they have implemented procedures to combat this issue. For the 2013 tax season, they have more than 3,000 employees working on identity theft issues, and they have also trained 35,000 of their employees to recognize the initial indications of identity theft and to help those affected by it. Below are ways the IRS are making improvements to help protect you and your business from identity theft.
Refund Fraud Detection and Prevention.
- Additional Screening Filters. The IRS has recently increased the number of identity theft screening filters that spot fraudulent tax returns before the refund is issued. They have also improved the quality of these filters to better protect taxpayers.
- Increased Identity Theft Investigations. Taking this issue very seriously, the IRS is working hard to ensure that as many people are protected as possible. IRS Criminal Investigators tripled the number of identity theft investigations in 2012, initiating 900 investigations. As a result, nearly 500 people have been indicted across the country. The IRS is working with over 130 financial institutions to identify potential fraud and identity theft. This collaboration has helped protect millions of dollars.
- Working with Law Enforcement. The IRS also has a program in place to share information with local law enforcement that will help with investigations, and pursuit of identity thieves. So far this program has been put into effect in 9 states, Alabama, California, Georgia, New Jersey, New York, Oklahoma, Pennsylvania and Texas. Together, these states represent a large percentage of the overall tax refund frauds. Plans are underway to continue the expansion of this program.
Increasing Efforts to Help Victims.
In addition to the IRS’ efforts in preventing identity theft, they have expanded their efforts to aid the victims of identity theft. Identity thieves generally steal information from sources outside the tax system; however the IRS is often the first to inform victims when their identity has been stolen.
There are three specific ways the IRS seeks to help victims:
- An IP Pin. The IRS issues an Identity Protection Personal Identification Number (IP PIN) to victims. The IP PIN confirms that the tax payer is the rightful filer of the tax return. These also ensure victims are not forced to delay filing or receiving funds. In 2013 more than 600,000 IP PINs have been issued.
- Victim Case Resolution. The IRS is continuously expanding this department for resolving cases of identity theft, and they are still adding employees for this coming tax season. Currently, cases take about 180 days to resolve, but they are working to streamline and expedite this process.
- Service Options. The IRS has an Identity Protection Specialized Unit that victims can contact for help and information regarding tax issues. 1-800-908-4490.
Improved Criminal Investigations.
- Increased Criminal Investigation Department. The IRS has a large criminal investigation department. In 2012 they tripled their number of criminal investigations from the previous year.
- Improved Communications. As mentioned, the IRS has established a program allowing identity theft victims to authorize the IRS to share information with local law enforcement. This kind of communication makes it much easier to both identify and indict these criminals. More than 65 law enforcement agencies are participating in this effort, and over 1,000 waiver forms have been received from taxpayers.
- New Investigation Guidelines. The IRS has also been working with the Tax Division of the Department of justice to create new guidelines for expediting investigations into identity theft refund fraud.
The IRS is continually reviewing processes and policies to minimize the incidence of identity theft and to help those who find themselves victims. Even with all of the steps the IRS is taking, identity theft through refund fraud is still an issue. Identity theft cases are some of the most complex cases that the IRS handles. Stay aware this tax season, and be glad the IRS is working hard to protect you.
For more information on this topic, check out the IRS’ Taxpayer Guide to Identity Theft.