Taxpayer Identity Theft is Growing Problem in MN, Nationwide
If tax time weren't painful enough, some Minnesotans are now victims of tax identity fraud -- and the number of scams is exploding nationwide.
In Brooklyn Park, Jason Bennett and his wife found out the hard way--when they went to file their return they found out someone had already done it for them.
The Bennetts say they're owed about a $2,400 dollar tax refund this year. "It was money that we were planning on to pay some bills," Jason explains.
But on April 15, Jason received an email from his tax preparer stating his return had been rejected. "I thought, 'all right, somebody used my social security number'," Jason remembers. "I knew it was identity theft."
Jason went to the IRS website and filled out an affidavit (Form 14039) to try to fix the situation. Then his wife did some detective work and found that someone (supposedly) named Regina Jackson at a (supposed) Miami address was granted a refund of nearly $4,700, using Jason's social security number.
"No red flags on any IRS software," Jason says. "You would think that there would be some sort of system that would compare your W2s on file with what's submitted."
Jason says he has no idea who Regina Jackson is. He also has no idea how his social security number was obtained by Ms. Jackson. He also says he's contacted local police and they've told him they're unable to investigate the issue.
According to Dudley Ryan, a CPA with CliftonLarsonAllen LLC, "these criminals are getting more sophisticated. They're getting the money downloaded to either false bank accounts or prepaid cards or something like that. And then they're gone."
Ryan says several of his clients are victims this year. Last year, none of them reported a problem. He believes the government is paying out billions in false claims. "It's unknown how long it's going to last and the only thing for sure is it's going to get worse," he asserts.
According to the Treasury Inspector General for Tax Administration, the number of taxpayers reporting identity theft has more than doubled in the last year. In 2010, there were 270,518. In 2011, the number jumped to 641,052. Last year, the IRS opened 276 criminal investigations into taxpayer ID theft and sent 80 thieves to prison. It's also set up a program that gives victims a special taxpayer-identity protection number so they can file future returns without complications.
Some tips that might help avoid taxpayer identity theft (but don't guarantee it) include:
*Don't answer email that claims to be from the IRS. The IRS never uses email to contact people.
*Don't send your social security number out over unsecured websites, even for legitimate purposes.
*Don't carry your social security card with you, in case you lose your wallet.
*DO shred personal documents.
The IRS has told Jason that he will eventually get his refund, but it might take more than a year. In the meantime, as for those bills, Jason and his wife say, "We're trying to pay them as we go along, scrape up some money here and there."
If you suspect you're the victim of taxpayer identify theft, fill out form 14039, available at http://www.irs.gov/pub/irs-pdf/f14039.pdf or you can call the IRS' identity protection specialized unit at 800-908-4490.
Mark Saxenmeyer can be reached at email@example.com