As many of you are aware, there is a crisis in the area of identity theft. Many thousands of individuals are the victims of identity theft every day. The problem is it may take weeks or months before you are made aware of the identity theft. And by then it may be too late to clean easily up and can cost you thousands of dollars to clear your good name. Well, what a lot of people are not aware of is people can steal your identity to file false tax claims with the Internal Revenue Services (IRS).
For those who have become the victim of a tax identity theft it normally can take about 280 days to resolve your claim and pay your refund if you are owed one. But the IRS states most claims are resolved in a still too long 180-day process that does not seem to be occurring as the norm is 100 days longer than what the IRS states.
Now the IRS has stated for many years that they will contact you via the US Postal Service if you owe any back taxes and not by telephone. The Inspector General for the IRS says that people need to be aware that individuals calling and claiming to be with the IRS and threaten additional fines or jail time if back taxes are not paid are illegal scams. Currently, the IRS does not call people when they have delinquent taxes, but that could change due to some recent moves by Congress.
As most people are aware, Congress has done little in recent years that has made any sense to the average person and what follows is no exception in that regard. After years of having the IRS collect delinquent taxes and do a fairly good job at it, the IRS will now be required to outsource its collection of back taxes by private companies. And yes this means that now those call that used to be labeled a scams could now be legitimate from private tax collectors hired by the IRS. Now this is not the first time the IRS has been tasked with taking the collection of delinquent taxes private but rather the third time. In the previous two experiments, the IRS was able to collect double what the private collection companies did at a fraction of the costs. Again, Congress is failing to see the forest for the trees by outsourcing a key component of what the IRS is clearly good at and causing issues for the average taxpayer.
So how does one commit tax filing fraud so easily? Well in 2013 the IRS estimates it paid out over $5.8 billion in bogus tax refunds. And yes you can thank Congress to a degree for this as well. The reasons is as simple as who receives your W-2 at the government and when. A normal person would think that the IRS would be the agency that receives the W-2 from your employer to be able to compare it to tax returns filed by people. But it is the Social Security Administration that receives the W-2 first. And that may not be until a late as the end of March. And then they are not required to provide that information to the IRS until July. Long after a false tax return has been filed and paid by the IRS.
An easy fix for this would be to have the IRS receive the W-2’s and then have them provide them to the Social Security Administration. So our illustrious Congress took action on this as well. They now have the W-2’s being filed with the Social Security Administration starting in 2017 by the end of January. Then the IRS will still have to wait for them to be forwarded to them for comparison and processing. While this may stop some tax filing fraud, it will not stop all of it as the IRS states it will pay most refunds within 21 days of the filing.
So how do you make sure you are not a victim of tax filing fraud? File your taxes as soon as you can before someone can file under your Social Security number without your knowledge. If you need additional information or require and additional information, please feel free to contact me directly.
