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US Federal Tax Services - Identity Theft

Identity theft is a very real problem in America. Every year, hundreds of thousands of innocent taxpayers face potentially serious tax, financial and personal problems because their identities have been stolen and used for illegal purposes.
 

In 2010 alone, the Internal Revenue Service (IRS) detected almost 1 million false returns. Tax thieves victimize innocent taxpayers in a number of ways. Most commonly, they file false returns under other people's names or the names of the decedents. They may claim people who have died as dependents on their own false tax returns.



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The Treasury Inspector General for Tax Administration (TIGTA) recently conducted a review of the Internal Revenue Service's (IRS) response to the recent rise in tax-related identity theft cases and issued a report.

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The report found that taxpayers whose identities are stolen receive confusing and conflicting instructions from the IRS and delays of sometimes longer than a year to resolve their tax problems. The result is an increased burden for the victims.



As of December 31, 2011, the IRS's Incident Tracking Statistics Report showed that 641,052 taxpayers have been affected by identity theft in calendar year 2011 (versus 270,518 in 2010). The growth in these cases has overwhelmed IRS resources and burdened taxpayers.

"TIGTA found that the IRS's current methods for handling identity theft cases are insufficient and taxpayers deserve better," said J. Russell George, the Treasury Inspector General for Tax Administration. "As the Federal Trade Commission has reported that identity theft continued to be the number one consumer complaint last year, and the most common form of reported identity theft involves government documents, the IRS must make handling these cases a priority," he added.

The IRS agreed with all of TIGTA's recommendations and has taken action to help identity theft victims, including:



  • Establishing a governance structure to oversee its identity theft initiatives
  • Making plans to expand its identity theft indicator codes identifying claims of identity theft
  • Making plans to review its suite of identity theft letters and to update its guidance instructing employees to notify taxpayers acknowledging receipt of documentation
  • Creating specialized units in the Accounts Management function that work only identity theft cases
  • Planning to create a specific quality review for identity theft cases
  • Evaluating options for enhancing the IRS's ability to track and analyze the fraudulent identity theft information removed from a taxpayer account

Often, the fraud is not detected until an individual files a legitimate tax return that is rejected by the IRS because a false return has already been filed and the refund paid.  If your tax return has been rejected by the IRS because of identity theft, help is available.  We are dedicated to protecting the victims of identity theft.

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