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As the 2013 tax filing season opened, the IRS announced a national crackdown on identity theft schemes aimed at stealing taxpayers' refunds. The tax agency announced there were 734 enforcement actions in January of this year, including indictments, search warrants, complaints and arrests. This follows 2,400 enforcement actions against identity thieves in fiscal 2012. The crime has trapped scores of innocent taxpayers. Here is a description of how tax identity theft works, along with eight steps you can take to help protect yourself from the devastating results. A Typical Tax ID Crime An identity thief generally uses a legitimate taxpayer's identity to fraudulently file a tax return and claim a refund. The identity thief uses a stolen Social Security number and other identifying information to file a forged tax return and attempt to get a fraudulent refund early in the filing season. In these schemes, there may be another victim. The Employer Identification Number (EIN) of a real organization could be fraudulently used to report fake earnings and withholding. The IRS may issue a refund to the thief before it realizes that there is no matching, legitimate paperwork from the employer. The real taxpayer may be unaware that tax identity theft has occurred until he or she files a return later in the filing season. The individual may discover it after receiving a letter from the IRS stating that: • More than one tax return was filed.
• There is a balance due, refund offset or collection actions were taken against the person for a year he or she did not file a tax return.
• IRS records indicate the individual received wages from an employer -- yet the taxpayer is unaware of them. When this type of tax identity theft fraud occurs, an individual's refund can be delayed for months or longer while the IRS unravels who is legitimate. The number of tax-related identity theft cases has increased substantially in recent years, according to the IRS Taxpayer Advocate Nina E. Olson. In her latest annual report to Congress, issued last month, Olson stated that identity theft case receipts increased by more than 650 percent from fiscal year 2008 to 2012. At the end of fiscal year 2012, the IRS had almost 650,000 identity-theft cases in its inventory servicewide. The IRS has faced criticism in its handling of identity theft cases from many fronts, including the Taxpayer Advocate. In her latest report, she stated "the IRS has failed to provide effective and timely assistance to victims of identity theft" and that a victim "is often sent on a journey through IRS processes and procedures that may take years to complete." The report added: "The victims of tax-related identity theft suffer extraordinary inconveniences and, in many cases, hardships. In general, more than 75 percent of U.S. taxpayers receive refunds, with the amount averaging about $3,000. Identity theft victims generally cannot receive their significant and sometimes urgently needed tax refunds until the IRS resolves their cases, which is now taking six months or longer. The IRS's failure to provide timely relief to these identity theft victims is simply unacceptable." Last summer, the Treasury Inspector General for Tax Administration (TIGTA) issued a report stating the IRS' difficulty in detecting tax-related identity theft stemmed from: • Delayed access to third-party income and withholding information - Third parties are not required to submit income and withholding documents to the IRS until March 31, yet taxpayers can begin filing returns in mid-January. (This year, the beginning of filing season was delayed until January 30 due to the "fiscal cliff" legislation enacted on January 2.) • The use of direct deposits, including debit cards, to claim fraudulent tax refunds - "Direct deposit provides the ability to quickly receive fraudulent tax refunds without the difficulty of having to negotiate a tax refund paper check," TIGTA noted. Tax refunds provided by the IRS on debit cards allow a thief to make ATM withdrawals or spend the money on purchases at stores. For the full article, click Here. At HR&P we know what drives your company. We have built a reputation on providing exceptional customer service and administrative solutions that help companies improve productivity and profitability. Please give us a call at 281.880.6525 or visit us HERE and we will be happy to talk to you. About HR&P:
Since opening our doors in 2000, HR&P has offered the highest quality human resource outsourcing and payroll services to a diverse pool of clients. By processing your payroll, managing your benefits and overseeing your human resource issues, HR&P makes your workforce flexible and able to meet your changing business demands. Our ongoing goal is to continue to develop specific solutions for each client that suit their particular needs. Contact HR&P:
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IRS, Tax ID, taxpayers, Tax ID Theft, Employee Benefits Administration, Employee Benefits Services, Human Resource Outsourcing, PEO,
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