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Why the IRS Won’t Tell Fraud Victims What Identity Thieves Stole

Tim Loo learned early this year that his name and Social Security number had made their way onto a fraudulent tax return, and immediately wondered whether the identity thief might also have his bank-account details or his kids’ Social Security numbers.050515

To survey the extent of the damage, Loo asked the Internal Revenue Service for a copy of the bogus return. It refused. TurboTax, whose tax-filing software the criminals had used, told him they couldn’t share the fake return with him either, for “privacy reasons.”

The Boston-based physician wondered: Whose privacy?

Loo is among the ranks of U.S. taxpayers—several million and rising sharply—who have had returns falsely filed in their name in recent years.

Millions of Returns
But the potential pool is big. About 2.4 million U.S. taxpayers’ names or Social Security numbers appeared in falsified returns in 2013.  That’s a nearly tenfold increase from 2010.

In 2013, the IRS estimates it paid out about $5.8 billion on returns it later determined were fraudulent, and prevented more than four times that amount.

The IRS is careful not to release documents that could inadvertently include others’ private information, it said in a statement. The agency also works—with victims’ consent—with law enforcement agencies, which requested copies of nearly 7,000 returns last year, according to the e-mailed statement.

Fraud victims can get a copy of the return from TurboTax after submitting a written request and verifying their identity, said Julie Miller, a spokeswoman for Intuit. Of Loo’s situation, Miller said by e-mail: “He may have connected with an agent(s) who was not familiar with our policy.”

IRS Letter
Loo’s troubles started earlier this year, he said, when the IRS sent him a letter saying that his 2014 taxes had been filed in February.

 

Victims’ Rights
What he really wanted was the bogus return, and there were a couple arguments in his favor.

Tax-fraud victims may be entitled to a copy of the “bad return” and information associated with it, the IRS’s legal department wrote in a 2012 memorandum available on the agency’s website. Loo said he also referenced the victims’ bill of rights, part of the 2012 Fair Credit Reporting Act, which says victims of identity fraud have the right to obtain documents relating to fraudulent transactions made or accounts opened using personal information.

Section 6103
Thanks to that stretch of the tax-code—section 6103, created by Congress in 1976 after revelations that President Richard Nixon had sought IRS audits of his political opponents—IRS workers can face criminal penalties for unauthorized disclosure of personal information. The penalty, as laid out in the tax and criminal codes, is up to five years in prison and a $250,000 fine.

IRS officials invoked section 6103 more than two dozen times to explain their silence during hearings in 2013, when lawmakers asked whether people at the agency unfairly scrutinized groups that advocated shrinking the government.

Flickering Hopes
It’s understandable that victims of tax-related identity theft would want to learn what information was stolen to guard against future misuse of personal data.

Meanwhile, Loo continues to try to get his hands on the return filed in his name. His hopes briefly flickered a few weeks ago when he received a letter from TurboTax. It was a bill, for the bogus return filed in his name, for $37.18.

Original Story at Accounting Today

From → tax scams