Taxpayer Identity Fraud More Than Doubled In 2011

A report by the Treasury Inspector General for Tax Administration (TIGTA) reveals that that taxpayer identity theft more than doubled in 2011, skyrocketing to 641,052 taxpayers affected as compared to 270,518 the prior year. 

As Eileen Ambrose of the Baltimore Sun explains, once a fraudster has someone’s Social Security number, all they have to do is “make up W-2 information, submit a return before the legitimate taxpayer files and receive a refund directly deposited on a debit card.” 

That, said Taxpayer Advocate Nina Olson during a July 10th House Judiciary Committee hearing, can mean a nightmare for victims.   “Identity theft wreaks havoc on our tax system in many ways,” explained.  “Victims not only must deal with the aftermath of an emotionally draining crime, but may also have to deal with the IRS for years to untangle the resulting tax account problems. Identity theft also impacts the public …(Treasury)… as Treasury funds are diverted to pay out improper refunds claimed by opportunistic perpetrators….Identity theft is not a problem the IRS can solve on its own.”

Phishing emails, stolen Social Security numbers, and fraudulent tax preparers are all cited as potential pathways for taxpayer identity fraud to occur. 

Amy Feldman, writing for Reuters, says that “Fighting taxpayer identity theft is a bit like going after Nigerian email scammers, a constant battle that seems unlikely to be won anytime soon.”