Instances of identity theft involving tax-refund fraud have skyrocketed.
As ABC News recently reported, taxpayers often learn they have been victimized when their tax return is rejected because one has already been filed under their Social Security number.
IRS-investigated cases of identity theft are up 66 percent since 2012. The agency identified $14.6 million in false returns and stopped $50 billion in fraudulent refunds in the last two years, and still the problem continues to grow. The IRS estimates it paid $3.6 billion in 1.1 million in fraudulent returns in 2011. That same year, 174,000 Social Security numbers were used by thieves to submit fraudulent returns before legitimate taxpayers legally filed. Ironically, many of these fraud cases are being carried out by thieves who are already behind bars.
CNN reported last year that fraudulent tax returns claimed by prisoners increased from $166 million in 2007 to more than $750 million in 201o. More than 91,000 inmates fraudulently collected $758 million in 2010, more than double the previous year.
Our Virginia identity theft attorneys know the steps you take after being victimized by tax fraud are similar to those in other types of identify-theft cases: Contact and review your credit report, contact the IRS, Social Security Administration and your other creditors. However, in many cases where a fraudulent refund has already been issued, or a citizen’s legitimate refund diverted to an illegitimate recipient, that might not be enough to resolve the issues. Speaking to an attorney experienced in handling identify theft cases can help protect your rights from the outset.
What consumers need to know about tax identity theft
As ABC reports, tax identity theft cases can be quite complex. In some cases, a police report will need to be filed, particularly if the IRS alleges you significantly under-reported your income based on false income provided by identity thieves.
The IRS’s 2014 Taxpayer Guide to Identity Theft identifies key warning signs: Having more than one tax return filed, having a balance due or collection action for a year you did not file a return or if the IRS has wages from an employer unknown to you. As a practical matter, anytime you have an unexplained balance due or a collection action, this should raise warning flags. The IRS Form 14039 is the IRS Identity Theft Affidavit the agency requires on file. The government also offers a toll free number to its Identity Protection Specialized Unit, for those who feel they may be at high risk of identity theft.
However, the tough reality faced by those who have been victimized has often been an endless series of toll free phone numbers, forms and red tape. In many cases contacting an experienced law firm can eliminate many of those headaches and hassles while offering the best chance at reaching positive resolution for the taxpayer.
Agency tips for minimizing your chances of being victimized include not circulating your social security number, checking each of your three credit reports annually, using adequate Internet security protections on your home computer, and not giving out personal information over the phone.
Identity theft attorneys in Virginia can help individuals who have been the victim of tax-refund fraud. Contact Consumer Litigation Associates, P.C. at 877-327-2529 to learn more.