Taxpayer ID theft hits new heights

WASHINGTON — Imagine filing your tax return and learning that someone else got your refund. With your name and Social Security number, no less.

The IRS is grappling with a nearly five-fold increase in taxpayer identity theft between 2008 and 2010, a Government Accountability Office official told a House hearing Thursday. There were 248,357 incidents in 2010, compared to 51,702 in 2008.

The GAO findings don’t begin to describe the pain for a first-time victim, who must wait for a refund while the IRS sorts out which return is real and which is a fraud.

Many identity thieves don’t get prosecuted, according James White, director of strategic issues for the GAO.

IRS Commissioner Douglas Shulman defended the criminal investigation record. He said his criminal division concentrates on schemes of national scope and added that 95 percent of those prosecuted for refund-related identity theft go to prison.

Tax identity thieves typically submit returns for refunds early in the filing season.

Some thieves steal a name and Social Security number to obtain a job. The employer will report the thief’s wage information to the IRS, as would the legitimate taxpayer’s employer. The victim then would receive an unwelcome IRS notice that he or she failed to report everything that was earned.

Tax form 14039, the IRS Identity Theft Affidavit, allows the agency to mark an account to identify future questionable activity. A task force of the IRS and other agencies established a website, STOPFRAUD.gov, which tells taxpayers what to do if they suspect identity fraud.