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22 States: Spike in Tax Fraud Against Doctors

An unusual number of physicians in several U.S. states are just finding out that they’ve been victimized by tax return fraud this year.

Scott Colby, executive vice president of the New Hampshire Medical Society, said he started hearing from physicians in his state about a week ago, when doctors who were just filing their tax returns began receiving notices from the Internal Revenue Service that someone had already filed their taxes and claimed a large refund.

So far, Colby has heard from 111 doctors, physician assistants and nurse practitioners in New Hampshire who have been victims of tax fraud this year.

AN EPIDEMIC OF TAX FRAUD?

Colby has heard similar reports from other states, including Arizona, Connecticut, Indiana, Maine, Michigan, North Carolina and Vermont.

Elaine Ellis Stone, director of communications at the North Carolina Medical Society, said that they thought the tax fraud incidents might be related to a move last week by Medicare’s first-ever release of information on payments to some 880,000 medical providers nationwide. As part of that data dump, the Centers for Medicare and Medicaid Services listed the National Providers Identification (NPI) number of each doctor; NPI numbers are used by the federal government to keep track of physicians for Medicare and Medicaid billing purposes.

Someone suggested that the recent release of so many NPI numbers may have allowed thieves to somehow look up Social Security numbers and other sensitive data on doctors. But according to Ellis Stone, those NPI numbers have long been available from the U.S. Centers for Medicare and Medicaid. 

There may indeed have been some kind of breach of a physician database that fueled this year’s fraud surge against doctors.

DOUBLE DIPPING

According to a 2013 report from the Treasury Inspector General’s office, the U.S. Internal Revenue Service (IRS) issued nearly $4 billion in bogus tax refunds in 2012. The money largely was sent to people who stole Social Security numbers and other information on U.S. citizens, and then filed fraudulent tax returns on those individuals claiming a large refund but at a different address.

 

If you become the victim of identity theft, either because of tax fraud — or due to fraud outside of the tax system — you are encouraged to contact the IRS at the Identity Protection Specialized Unit, toll-free at 1-800-908-4490 so that the IRS can take steps to further secure your account.

That process is likely to involve the use of taxpayer-specific PINs for people that have had issues with identity theft. If approved, the PIN is required on any tax return filed for that consumer before a return can be accepted. To start the process of applying for a tax return PIN from the IRS, check out the steps at this link. You will almost certainly need to file an IRS form 14039 (PDF), and provide scanned or photocopied records, such a drivers license or passport.

 

Original story at Krebs on Security