For Identity Theft Victims, Paying Taxes is a Nightmare
By Allison Linn
After
Meghan Bach learned last year that her husband’s identity had been
stolen to collect a fake tax refund, she spent perhaps 200 hours working
to resolve the issue with the IRS and other agencies.
She thought
she had been successful until the family returned home from a vacation
this month to find that her husband’s identity had been stolen again.
“It’s just appalling,” she said.
The IRS has acknowledged that
identity theft
tax fraud –- stealing someone’s Social Security number to file a fake
tax return and collect a bogus refund –- is one of the most complex
issues it deals with. Victims describe hours of phone calls, piles of
correspondence and long periods of silence in which they aren’t sure
whether their problems are being resolved or not.
The tedious process has left some victims worried about what will happen when they file this year’s tax returns.
“Of
course I’m nervous,” said Dr. Vera Rosado, 33, who found out last year
she was a victim and still has not been able to get it resolved with the
IRS.
Rosado, a physician studying infectious diseases in
Indianapolis, was recently told to file her fraud affidavit for a second
time and her 2010 return for a third time after previous filings was
lost. She said the IRS has told her it could take another few months to
get the new paperwork processed.She is waiting to get an
approximately $3,000 refund check from last year’s return, which she
plans to use toward medical board exams.
The IRS estimates 404,000
people were victims of identity theft tax fraud from mid-2009 to the
end of 2011, and officials say the
problem is growing.
The
agency recently set up a specialized unit to just to deal with identity
theft tax fraud, and it is expanding its screening process aimed at
flagging this type of fraud. The issue also has attracted the attention
of the some U.S. Senators. On Tuesday, a finance subcommittee held
a hearing on the matter.
The IRS said it could not comment on specific cases such as Rosado’s and Bach’s because of privacy laws.
Experts
say the IRS is working hard to root out identity theft tax fraud in the
approximately 140 million tax returns that come in each year. But some
believe the problem will get worse before it gets better because it will
take time to train staff members to root out and deal with such issues.
“For
the next four to five years it’s going to be a learning curve for
everybody across the country,” said Jay Foley, a partner with ID Theft
Info Source.
Foley said one issue is that IRS employees who aren’t
part of the identity theft unit may not know how to handle such
complaints. That’s why they might audit tax forms instead of use them in
an investigation, for example, or not file paperwork correctly.
He recommends that anyone who is a victim of such fraud work directly with the
identity theft unit and also contact the
Taxpayer Advocate, an independent agency charged with assistant taxpayers who are having problems.
Foley said the bad news is that there is little people can do to shield themselves from such fraud attempts.
“There’s absolutely nothing that can be done at this point in time that’s going to give you a guarantee of safety,” he said.
Bach,
a real estate agent who lives in San Diego, found out her husband had
been a victim of identity theft tax fraud in March 2011, when she tried
to file their
taxes and learned that someone had already filed a return using her husband’s name and Social Security number.
Over
the next year, she said she spent several hours each week working with
the IRS and other government agencies to get the fraud resolved on
behalf of her husband, a military doctor.
At one point, she sent
the IRS summaries of her past 10 years of tax returns in order to prove
that she and her husband were the true taxpayers. Instead, she said, the
IRS audited one of those returns and presented her with a bill for
nearly $900.
She paid that bill, then successfully contested a
later IRS attempt to audit another past return she had provided to prove
her family’s identity.
Eleven months later, the family finally
got its refund for the 2010 return and she figured the issue had been
resolved. But a few weeks ago, they returned from a Disneyland vacation
to find letters from the IRS that had been addressed to her husband had
instead been sent to an address down the street that had recently been
used as a rental. The mail had been returned to the post office and
redelivered to Bach.
One letter, sent to the other address, was
informing the family that they had once again been victims of tax fraud
for the 2011 tax year. The second letter said that a refund of more than
$10,000 was being applied to an existing balance of more than $12,000
that the letter said the family owed the IRS.
Bach said the family
had not yet filed their 2011 taxes and was not scheduled to receive a
$10,000 refund for the year. They also did not owe the IRS any money –
in fact, after their fraud had been resolved, she said the IRS had sent
them a refund for 2010 with interest.
Bach surmises that the fraud
might have occurred at the address where the IRS correspondence was
sent. She doesn’t know if the IRS sent any other correspondence to that
address.
Bach and her husband immediately went to the local IRS
office to get the address issue corrected. In addition, she said she has
left multiple messages with the IRS identity theft case manager she has
been working with but has not heard back. She plans to file her real
2011 tax return this week.
Bailey Yahraus, 30, found out four years ago that her husband and young children’s Social
Security
numbers had been used to file a fraudulent return. The couple got it
resolved, and for the next couple years they used a tax filing service
to file their returns with no problems.
This year, Yahraus decided
to file her return herself using an online tax service. That’s when she
found out that her children’s Social Security numbers had already been
used by someone else claiming them as dependents.
Yahraus, who
lives in Montpelier, Ohio, has been trying to figure out how she can
keep the Social Security numbers from being used fraudulently again.
She’s worried about what effect the ID theft might have on her kids when
they become adults.
But after a rough few years in which both she
and her husband lost their jobs and got new ones, she hopes to shield
them for now.
“They’re 8- and 9-year-old boys,” she said. “They’re worried about
baseball, basketball (and) football.”
Richard Figley
Independent Associate
figleyr@legalshield.com
614-395-2313
www.800-DO-A-WILL.com
www.ID-TheftProtection.com
In our cyber-connected world, we’re increasingly at risk of data breaches, hackers, phishing scams, and all manner of identity theft.
While many adults have learned to keep their Social Security number
protected and to not give out personal information over the internet or
phone, a new victim of identity theft and fraud is on the rise—our
children.
