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Tax refund fraud: doctors' case shows problem not fully diagnosed

In many ways, doctors have a good life.

Compared to other workers, they are generally well paid. And they also have the professional satisfaction of knowing their work matters because it is aimed at taking care of people's health.

But in recent days, it has also been widely reported that many doctors have been targeted for tax refund fraud.

Doctors are concerned that a possible data breach may have compromised their personal information.

The data breach may have occurred with the release of a Medicare report that contained personal information about many physicians. Though the report did not contain Social Security numbers, it did have other personal data.

The IRS and the U.S. Secret Service are looking into the matter.

Medical groups in numerous states have reported cases of tax fraud against doctors and other health care workers.

Tax refund fraud linked to identity theft has been a major problem nationally in recent years.

As we noted in our May 22 post last year, there are concerns that the trend toward e-filing has helped to facilitate refund fraud. This is because e-filing is often accompanied by direct electronic deposit of refunds - a method often used by identity thieves who target their victims' tax refunds.

The IRS put in place new filters for this tax year, seeking to identity false refund claims by using various analytical tools.

Clearly, however, those efforts have not been sufficient to fully address the problem. Doctors - and all taxpayers - deserve a better diagnosis and effective actions to fix the refund fraud problem.

Source: Reuters, "U.S. investigating theft of doctors' tax refunds," Jim Finkle and Mark Hosenball, April 25, 2014

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