Identity Management

Identity Thieves Targeting Tax Returns

January 14, 2014
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Identity theft is the number 1 complaint to the Federal Trade Commission, and tax-related identity theft is a growing part of this crime spree. In 2010, about 15 percent of all identity theft complaints to the FTC dealt with tax returns. In 2013, that jumped to 43 percent, said CNBC.

One way to prevent this from happening is to file early because the IRS may be able to process your return before the identity thieves can, said CNBC.

"It really can be a race to the IRS," said Steve Toporoff, coordinator of the ‎Identity Protection Program at the FTC. "They usually don't have access to W-2 forms, so they just make up income numbers and hope their phony return gets through the process," Toporoff explained.

If the crook is successful, your legitimate return will be kicked out and the refund denied because the IRS computers will show that you were already paid, said CNBC. You will get your money, but it could be delayed for months. The IRS says a typical case can take about 180 days to resolve, said CNBC.

Identity theft is a top priority for the IRS. On its website, the agency says it's taking "new steps and strong actions to protect taxpayers and help victims of identity theft and refund fraud." And it has more than 3,000 employees working on identity theft issues.

The agency's criminal investigation unit has focused on finding and prosecuting the thieves who commit return fraud. In fiscal year 2013, said CNBC:

  • The IRS started 1,492 criminal investigations related to identity theft, up 66 percent from the previous year.
  • Indictments and sentencing doubled—the average prison term was more than three years.

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