The IRS, Department of Justice, Secret Service, and even the U.S. Postal Service all worked together in recent months to crackdown on identity theft. The group effort helped stop identity thieves from filing fraudulent tax returns and led to 58 arrests, including three Southern California residents.
Identity theft and tax fraud are serious problems for taxpayers in the United States, leading to financial ruin that takes years to recover from. The recent IRS efforts to curb this activity include monitoring 250 check-cashing operations for signs of identity theft.
For victims of identity theft, this crackdown may help clear their names. As a part of the effort, the IRS has introduced new screening methods to prevent fraudulent returns from being issued.
Fraudulent returns are often filed early and refunds issue without investigation. The IRS may become suspicious only when the real taxpayer files their return. The attempt to stop the fraudulent refunds from being issued has caused some delays for honest early filers, which the IRS says they are working to clear up.
The ongoing investigations could also lead to increased contact from the IRS for people with unclear or confusing tax returns. This can be a stressful situation for both potential fraud victims who receive notification of investigation, and people suspected of tax fraud. Having an experienced advocate during this process can alleviate uncertainty and expedite the resolution.
Identity theft can start anywhere Social Security numbers are stored, such as schools or hospitals. Consumers should use caution when choosing to provide their Social Security number to an entity.
Sources: Wall Street Journal, "IRS Spearheads Bid to Head Off Identity Theft," Laura Saunders and Kristina Peterson, Feb. 1, 2012.