Here is a link to Steve Weisman’s latest column from USA Today about income tax identity theft
November 14, 2015 Posted by Steven Weisman, Esq.
Here is a link to Steve Weisman’s latest column from USA Today about income tax identity theft
November 7, 2015 Posted by Steven Weisman, Esq.
Income tax identity theft by which identity thieves file an income tax return using the Social Security number of their victim and get a substantial income tax refund based on a counterfeit W-2 is a huge problem that is only getting worse. It cost the federal government and, as a result, we the taxpayers 6.5 billion dollars in 2013. Recently, however, the IRS announced a new cooperative effort between the IRS, state tax administrators and private tax preparation leaders. Included among the steps being taken are review by the IRS of the IP address of computers filing income tax returns to identify computers filing multiple returns and reviewing the time it takes to complete an electronic income tax return which can also help identify fraudulent returns since completing a fraudulent return generally takes less time than a legitimate return. In addition, income tax preparation software companies will be using enhanced validation protocols including increased use of security questions.
However, all of these steps which are expected to cost taxpayers an additional 281 million dollars to implement totally miss the point. The easiest and simplest way to dramatically reduce income tax identity theft still is not being done by Congress, namely changing the laws regarding employers filing of W-2s. Under present law, for the upcoming tax filing season, employers must file W-2s with the federal government by February 29th if they file paper W-2s and as late as March 31st if they file, as so many do, electronically. Unfortunately Congress in its infinite wisdom requires these W-2s to be filed with the Social Security Administration (SSA) by those dates. The SSA does not send the W-2s to the IRS until July so the IRS does not get around to matching the W-2s filed by employers with those filed by individual taxpayers with their income tax returns until months after the IRS has already sent a refund based on the W-2 filed by the taxpayer or identity thief. In order to dramatically reduce income tax identity theft, all Congress has to do is merely require employers to file W-2s with the IRS instead of waiting for the SSA to send them to the IRS. It also would make much more sense than Congress appears to have to require the IRS to match those employer filed W-2s with those filed by individual taxpayers BEFORE sending out a refund in order to easily identify counterfeit W-2s. For years Congress has been advised to make these simple changes, but it still fails to do so.
As for we as individual taxpayers, what can we do to reduce our chances of becoming a victim of identity theft? Of course, protecting the privacy of your Social Security number is extremely important, but with so many data breaches at companies that have this information, this is somewhat outside of our control. However, what we can do is to file our income tax returns as early as possible. In order for an identity thief to make you a victim of income tax identity theft, he needs to file an income tax return using your Social Security number before you file a return. If it is filed after you have filed a return, it is too late for the identity thief to claim a refund using your information.
August 31, 2015 Posted by Steven Weisman, Esq.
Unless you live in Utah, the name of Jason Chaffetz may not be familiar to you. Jason Chaffetz is a Congressman from Utah, the Chairman of the House Oversight Committee and a recent victim, as he disclosed this week, of income tax identity theft. Chaffetz did not find out he was a victim of income tax identity theft until he went to file his income tax return only to be told that someone else had filed using his name and Social Security number. Fortunately for Chaffetz he owed money to the IRS so the fact that he is a victim of income tax identity theft will not delay the payment to him of a refund. Those victims of income tax identity theft who are owed a refund find insult added to injury as they must wait many months before the IRS completes its investigation and sends a refund. Chaffetz has long been a critic of IRS Commissioner John Koskinen and this latest matter has only added to the reasons Chaffetz is using in asking for Koskinen to be fired.
Although Congressman Chaffetz is rightfully placing much of the blame for income tax identity theft on Commissioner John Koskinen, there is plenty of blame for income tax identity theft on the part of Congress itself which continues to fail to pass legislation to require employers to file W-2s with the IRS at the same time they file them with the Social Security Administration. Presently, employers file W-2s for their employees with the Social Security Administration either at the end of February or March depending on whether they are filing electronically or by paper. The Social Security Administration does not get around to sending the W-2s to the IRS until July, long after the IRS has already sent out refunds to many income tax identity thieves who filed counterfeit W-2s. If the IRS received W-2s early and compared them to the W-2s filed with income tax returns before sending out refunds, a tremendous amount of income tax identity theft could be avoided. As for what we as taxpayers can do to protect ourselves from income tax identity theft, the best things you can do are to keep your Social Security number private and file your income tax return early before an identity thief files one before you do.
August 29, 2015 Posted by Steven Weisman, Esq.
Here is a link to Steve Weisman’s latest column for USA Today.
August 29, 2015 Posted by Steven Weisman, Esq.
The trend of people suing companies and government agencies deemed responsible for data breaches due to their failing to take proper steps to protect personal information they hold continues to accelerate with the recent filing of a proposed class action on behalf of the approximately 330,000 people affected by the recent data breach of the IRS’ Get Transcript program about which I have reported to you a number of times here at Scamicide. Go to the Archives for more information about this particular data breach. According to Richard McCune, one of the lawyers who filed the lawsuit, “As custodians of taxpayer information, the IRS has failed in its obligation to protect the personal and sensitive information of hundreds of thousands of taxpayers, their spouses and families. Furthermore, the breach and theft occurred after repeated warnings over the course of several years regarding the lax computer security system.”
If you were affected by this data breach and want more information about the lawsuit, you can contact McCuneWright, one of the law firms that filed the lawsuit by clicking on this link. http://www.mccunewright.com/contact.php
As for the rest of us, the best things you can do to protect yourself from income tax identity theft is to protect the privacy of your Social Security number and file your income tax return as early as possible to prevent an identity thief from filing one using your name and Social Security number before you get a chance to file your legitimate return.
August 19, 2015 Posted by Steven Weisman, Esq.
Earlier this week, the IRS announced that the hacking of its “Get Transcript” program, which they had originally announced in May and which was the subject of my Scam of the day for May 28th was far worse than they originally disclosed. While originally, the IRS stated that 104,000 people were affected by the IRS data breach, now the IRS is saying that the number of people affected is more than 300,000. As a result of the data breach, the IRS indicated it paid more than 50 million dollars in fraudulent returns filed using the information stolen from the IRS’ “Get Transcript” program. The”Get Transcript” program enables taxpayers to get copies of their federal income tax returns from previous years. People often use this service to get copies of earlier income tax returns for uses such as when they apply for a mortgage or financial aid for college. The IRS shut closed this service when it became aware that vulnerabilities in the system resulted in hackers attacking the system from mid February until May posing as legitimate taxpayers and getting copies of income tax returns which could provide information that would enable the hackers to steal the identities of their victims and file phony income tax returns in the names of their victims and claim bogus refunds.
Although many people were surprised at this hacking, Scamicide readers were not among them because here at Scamicide, we exposed this vulnerability in the “Get Transcript” program in our Scam of the day for April 3, 2015. Apparently, the IRS doesn’t read Scamicide. Maybe it should.
The problem with the system was in the authentication process used by the IRS to limit access to this information to the taxpayer who is seeking his or her own income tax returns. In order to access the income tax returns, the system required the inquirer to provide his or her name, Social Security number, birth date, address and other personal identity verifications, such as what was your high school mascot or when you got a mortgage. The problem is that, in many instances, this information can be gathered by a diligent hacker from public data bases, social media where people provide this information to hackers, and data breaches.
If you are one of the people affected by this data breach, you will get a letter, not an email, from the IRS and will be offered free credit monitoring services. These letters will not require you to provide any personal information in response. Any communication you get that purports to be from the IRS that requests that you provide personal information is not from the IRS, but from another scammer.
A lesson for all of us is to remember to try to protect the privacy of your Social Security number as best you can. Most identity theft starts with the identity thief obtaining and exploiting the victim’s Social Security number. Don’t provide it to companies with which you do business unless you absolutely must do so. Medical care providers routinely ask you to provide this, but they have no need for this and the health care industry has been among the worst in protecting its data from being hacked.
The verification process of using personal identity verification information is fundamentally flawed in today’s world. Better systems should be used, such as dual factor authentication where a code is sent to your smartphone when you need to access an account.
August 18, 2015 Posted by Steven Weisman, Esq.
A good indication as to how pervasive income tax identity theft has become is the recent indictments filed in California against 32 members of the Long Beach gang called the Insane Crips. Among the charges were 299 counts of identity theft. Filing income tax returns using names and stolen Social Security numbers of their victims, the gang managed to obtain more than 3 million dollars in refunds loaded on to prepaid debit cards, which is an option offered by the IRS. The fact that young, unsophisticated gang members are able to steal this much money from the IRS filing fraudulent income tax returns is a good indication of how easy this crime is to accomplish.
The best place to find a helping hand is always at the end of your own arm. Do not depend on the IRS protecting you from income tax identity theft. Protect the privacy of your Social Security number as best you can and file your income tax return as early as possible so that an identity thief cannot file one before you and get a refund before you file your return. If you are a victim of income tax identity theft, it can take many months before the IRS will complete its investigation of the matter and send you your proper refund.
August 17, 2015 Posted by Steven Weisman, Esq.
Income tax identity theft is a major problem. It costs the federal government and therefore the legitimate taxpayers an estimated 5 billion dollars per year. The IRS is fully aware of the problem and therefore has just issued final and temporary regulations that will go into effect two years from now that remove the automatic thirty day extension of time for employers to file W-2s in an effort to help curb income tax identity theft. Identity thieves often file their fraudulent income tax returns using counterfeit W-2s that indicate a large refund is due. Under the law, employers who file paper W-2s must file W-2s on the last day of February and if they file electronically, they must file the W-2s on March 31st, so the new regulations will prevent employers from extending those deadlines automatically to the end of March and end of April depending upon whether the employer is filing W-2s by paper or electronically.
However, the regulation is utterly useless and ineffective because under the present law, when an employer files W-2s, they are not filed with the IRS. They are filed with the Social Security Administration, which does not get around to forwarding them to the IRS for matching against submitted income tax returns to verify whether or not the W-2 filed with the individual’s income tax return is legitimate until July or August, which is long after the IRS has already sent out refunds without ever matching the W-2s filed by taxpayers with those filed by employers. The new regulation does not improve the situation at all. A far better solution would be for Congress to merely enact legislation requiring employers to file their W-2s with the IRS at the same time they file them with the Social Security Administration and for the IRS to match the W-2s filed by employers with those filed by taxpayers before the IRS sends out refunds. This simple and inexpensive step would dramatically reduce the amount of income tax identity theft. Congress and the IRS have been advised for years to do this, but they still have done nothing.
The best steps you can take to protect yourself from becoming a victim of income tax identity theft are to maintain the privacy of your Social Security number and file your income tax return as early as possible in order to beat an income tax identity thief from filing an income tax return in your name before you do. Meanwhile, we all should contact our Senators and Representatives to urge them to change the law to require employers to file W-2s with the IRS at the same time they file them with the Social Security Administration and for the IRS to match those W-2s with those filed by taxpayers before sending out refunds.
Here is a link to a website that will provide you with the email addresses of your Senators and Congressmen. http://www.contactingthecongress.org/
July 20, 2015 Posted by Steven Weisman, Esq.
The National Taxpayer Advocate (NTA) is an internal watchdog for consumers within the IRS. Each year the NTA is required to issue two reports. A few days ago Nina Olson, the National Taxpayer Advocate issued her midyear report and it was not very complimentary in regard to the response of the IRS to victims of income tax identity theft. Income tax identity theft where an innocent taxpayer’s Social Security number is used by the thief to file an income tax return in the name of the victim claiming a substantial refund based generally upon counterfeit W-2s results in not only losses to the IRS and, by extension the federal treasury, but also causes the victim’s tax return to be flagged and investigated in great detail before the innocent victim finally receives his or her legitimate income tax refund and it is here that the National Taxpayer Advocate found the IRS to be failing. With present IRS filters, more than 600,000 legitimate returns of taxpayers were screened and frozen as suspicious last year, but the IRS’ programs for completing the investigations of those returns and getting the innocent victims their rightful refunds are seriously lacking. Only 17% of telephone calls from innocent taxpayers whose tax returns had been frozen as suspicious were even answered and during three consecutive weeks during filing season this figure dropped to 10%.
In addition, although the IRS has made some progress in assisting the innocent victims of income tax identity theft in getting their legitimate refunds, it still takes, on average, 278 days to resolve the claim of a victim of income tax identity theft although the IRS routinely tells taxpayers that they can expect their claims to be resolved within 180 days.
So what should you do if you are a new victim of income tax identity theft? Filing a police report immediately is very important in order to document your claim. Although this is the era of electronic communications, the next thing you should do is mail to the IRS a paper tax return with an attached Form 14039 Identity Theft Affidavit and the police report. According to the IRS, this will shave an average of 54 days off the time it takes the IRS to process your claim. Your case will then be assigned to an IRS employee to assist you with clearing your name and getting your refund. As a victim of identity theft, you also are eligible to receive an Identity Protection Personal Identification Number (IP PIN) to use for future income tax returns to protect you from becoming a victim again of income tax identity theft. You also should put a credit freeze on your credit report because if someone is able to file an income tax return on your behalf, they have access to your Social Security number which they could also use to access your credit report and obtain credit in your name. Putting a credit freeze on your credit report will thwart future attempts by an identity thief to access your credit. You can find information about credit freezes and how to put one on your credit reports at Experian, Equifax and Transunion by going to the Archives section of Scamicide.
July 9, 2015 Posted by Steven Weisman, Esq.
Income tax identity theft continues to be a major problem costing taxpayers 5.8 billion dollars last year and causing tremendous hardship to the individuals whose identities were stolen and used to file fraudulent income tax returns. Here is a link to a video of a speech given by Steve Weisman to an IRS town meeting of tax preparers and IRS officials. http://ezwp.tv/V8VcuLNq