Tax-Related Identity Theft

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According to an Internal Revenue Service Incident Tracking Statistics Report, tax-related identity theft affected more than 600,000 taxpayers in 2011, and the number is climbing.

Dealing with the problem is time-consuming and difficult, and both the Treasury Inspector General for Tax Administration and the Taxpayer Advocate have recommended changes to IRS procedures, some of which have already been implemented. For instance, notices to affected taxpayers have been revised for easier reading, and improved to provide more accurate information.

The fixes to other identity theft issues are still in planning stages. Here’s what the IRS is working on.

Problem: Failure to use data from identity theft cases to detect and prevent future refund fraud.

Suggested Fix: Create a specialized unit to work only on identity theft cases.
Implementation Date: July 15, 2013

Problem: Tax returns rejected due to duplicate filings can take anywhere from six months to a year to resolve.

Suggested Fix: When identifying documents received, send a notification with contact information and the time-frame necessary to process and settle the case.
Implementation Date: September 15, 2013

Problem: Notices and correspondence are sometimes sent to the address supplied by the identity thief.

Suggested Fix: Use already-developed tracking indicator codes that mark identity theft accounts to alert and stop correspondence to the wrong person.
Implementation Date: September 15, 2013

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