For the 2011 filing season, the Treasury Inspector General for Tax Administration (TIGTA) estimated that identity-theft-related fraud accounted for approximately 1.5 million tax returns in excess of $5.2 billion.
While the new movie Identity Thief portrays a story of humor, it also emphasizes just how serious a problem this has become. Many of us have been victims of identity theft on a small scale, unfortunately, some on a larger scale. The scam seems pretty obvious- employee information is stolen or sold to the perpetrator, and they file the return claiming a refund earlier than the “actual” person. How easy is that? When the “actual” person files their return they are then assumed to have filed the illegal or incorrect return because a refund has already been issued using their social security number and wage information.
It is nearly impossible to untangle any type of problem with the IRS, let alone trying to get your money back when they already paid it to someone else and they say that you do not exist. It is interesting that the article references the many filters that the Internal Revenue Service has for returns that are filed to prohibit something like this from happening. However, they also say that there was “a single address that was used to file 2,137 tax returns for $3.3 million in refunds.” REALLY? What kind of filters are they using at the IRS to miss that one? OR “590 tax refunds totaling more than $900,000 were deposited into a single bank account.”
These seem like easy catches. How could the same bank account be used for almost 600 refund checks? With technology as sophisticated as it is, a refund issued to a duplicate bank account should be an easy one to catch and stop immediately. The key here is to stop it before it gets to the IRS. How can we as your tax preparer help keep it from getting that far?
Rest assured that we take every step to protect your vital information such as:
- Shredding all papers, nothing goes in the garbage can
- Utilizing encryption procedures, especially when sending client information to a third parties like bankers or attorneys
- Constant communication with clients about phishing schemes that we become aware of.
- Mandatory use of anti-virus and security software on all firm computers
- Utilizing paperless technology whenever possible to deliver returns to our clients (publishing to the portal)
- Stressing to clients that the IRS does not initiate contact with taxpayers by email to request personal or financial information.
We will do our part, but you also have to help protect your personal information with the normal safeguards. Don’t be one a victim of identity theft- whether on a small or grand scale- it can take countless hours of your time and dollars paid to professionals to reclaim who you are.
By: Jennifer Kinzel, CPA, CMA, CGMA
