Monday, April 8, 2013

Beware of Refund Fraudsters

A fairly new type of fraud being perpetrated on taxpayers employs the use of a taxpayer’s identity to file a fraudulent claim to receive a refund. While this is a form of identity theft, it differs somewhat in that the only information required is the individual’s name and social security number. Once obtained, the fraudster files a false tax return under that name and social security number, claiming a refund is due and if the return makes it through the IRS system, a check will be generated to the defrauding party.

Last year, some taxpayers only learned that they were victims when they attempted to file their returns electronically only to have the IRS tell them a return had already been filed in their name. Since this manner of fraud was relatively new last year, the IRS had very few systems in place to cope with the problem. 

This year, the IRS is very aware of this type of fraud and is actively working to identify fraudulent returns and find the perpetrators. Because there was a major surge is this type of fraud during the 2012 tax season, the IRS put significant resources into reducing the attractiveness of this type of activity by making is harder to get a fraudulent return through the system. The IRS now has over 3,000 specially trained employees assigned to work in this area. 

When two returns are filed under the same social security number, the IRS is notified. Once the rightful owner of the social security number shows their legal ownership, the IRS issues a unique identification number to them which they will continue to use in future years when filing their returns to avoid additional problems. 

If you find that you have been a victim of this type of identity theft, you will need to complete an Identity Theft Affidavit and provide it to the IRS. The form is available online at http://www.irs.gov/pub/irs-pdf/f14039.pdf. At this point, the IRS will begin verifying you as the owner of the social security number and issuing you the unique ID number. To speak with an IRS representative about the identity theft prevention program, call 800-908-4490.

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