A Miami couple now faces what too many Americans have had to deal with in recent years – identity theft.
The couple filed their joint income tax return this year, only to find out someone else had used their Social Security information and employers’ names, filing a falsified refund claim, which caused the IRS to reject the couple’s legitimate filing.
Now the couple has to wait six to 12 months to get their refund, while they deal with identity theft, tax fraud and IRS red tape.
An IRS representative informed the couple that one of their identities was stolen and used for the false filing, but they were told nothing else. They did discover, however, that the IRS did nothing to verify the filing by the identity thief.
An increase in identity theft and tax fraud have forced the IRS to come up with smarter ways to detect phony refund claims, match employee-employer wage statements and handle victim refund issues with electronic filings.
IRS Commissioner Douglas Shulman said the agency has focused not only on the viral identity theft problem, but also on potential solutions like real-time matching of W-2 statements before tax refunds are issued.
But scammers continue to exploit a weakness in the IRS electronic filing system, because the agency doesn’t match filers’ tax returns to W-2 forms filed by employers until months after the filing season ends in April. This means the IRS is not scrutinizing fabricated documents before it issues refunds to thieves.
Fixing the problem will mean the IRS will have to modernize its processing system and set new rules, mandating that employers file workers’ income statements earlier in the year.
In the meantime, the IRS has designed software filters to flag false returns before they are processed and refunds are issued, including screens that spot certain changes in a taxpayer’s filing, like a different address of marital status.
Tags: Identity Theft, LifeLock, tax fraud, Tax identity theft
