Monday, May 30, 2011

Identity Theft Involving IRS Is Mushrooming.


Dealing with the IRS is stressful enough. So is dealing with identity theft.
For a large and growing number of Americans, there’s a fresh hell: dealing with both at once.
Since 2008, the IRS has identified about 470,000 incidents of identity theft affecting more than 390,000 taxpayers, Sen. Bill Nelson (D., Fla.) said at a Senate Finance Committee hearing on Wednesday.
The problem appears to be expanding rapidly. In 2008, there were about 52,000 incidents involving the IRS, according to the Government Accountability Office. In 2010, there were 245,000.
Many of the cases involve scammers using stolen Social Security numbers to file fraudulent returns in hopes of getting a quick refund check. But some cases also involve people using fake Social Security numbers for work, resulting in unexpected reported income for the real Social Security number holder.
Either way, the phenomenon can be a nightmare for victims.  For everyone, it’s another sign of how complicated and vulnerable the income-tax system can be.
At a separate House hearing on Wednesday, lawmakers considered the growing problem of improper and fraudulent payments under several popular tax credit programs that are aimed at helping lower-income people. Some of those claims also seem to be coming from people who are disguising their identity.
False refund claims by prison inmates are a particular source of aggravation for officials, in part because of the difficulty of solving the problem. Mr. Nelson said he’s working on ways to strengthen information-sharing in order to crack down on scams.