Taxpayer identity theft increased five-fold between 2008 and 2010 according to the Government Accountability Office (GAO). The office plans to share this news–provided to them by the Internal Revenue Service (IRS)–during a House hearing on Thursday in hopes of curbing this type of fraud before it gets even more out of control.
Taxpayer Identity Theft Jumps by Nearly 200K in 2 Years
The IRS is struggling with taxpayer identity theft and its substantial increase over a two-year period. According to the GAO, there were 248,357 incidents of identity theft in 2010, which included taxpayers having their names, Social Security numbers and tax refunds stolen.
This number was a significant increase over the 51,702 taxpayers who had their identities stolen in 2008.
The GAO and IRS are trying to determine how to deal with the increase in theft in a time when it’s difficult to even track down the thieves, let alone make them pay.
As noted by James White, director of strategic issues for the GAO in a USA Today article, many identity thieves don’t get prosecuted at all. White said in a testimony prepared for a House Oversight and Government Reform subcommittee that “IRS officials told us that IRS pursues criminal investigations of suspected identity thieves in only a small number of cases.”
In fact, during the 2010 fiscal year, the IRS criminal investigations division was said to have only initiated around 4,700 investigations of all types — a significantly lower number than identity theft cases alone.
House Reps Want to Protect Americans ASAP
After seeing the low number of IRS investigations that have been initiated, House reps say they want to get a handle on the problem and begin protecting the public immediately. The problem is that protection often can’t happen until the theft occurs.
One reason is because identity thieves usually take a person’s identification information then quickly file a tax return early in the season. The IRS issues the refund and doesn’t know there is a problem until the legitimate taxpayer files their return weeks later with the same Social Security number.
Another reason is taxpayers usually don’t find out until a thief has applied for a job under their identity, begun earning income and then two different employers report wages for the same worker. When the legitimate taxpayer receives a letter stating that they’ve under-reported their income, the identity theft comes to light.
The IRS says those who have become a victim of identity theft can use tax form 14039, the IRS Identity Theft Affidavit, to have the IRS mark an account to identify future questionable activity after a first theft. They can also visit STOPFRAUD.gov if they feel they’ve been victimized.
But it’s good to learn how to prevent identity theft so that you can at least lower your chances of becoming a victim while the IRS, GAO and House of Representatives work out how to protect taxpayers this week.
