2,137 Tax Returns From One Address?

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By: USA Today.   April 2013

Believe it or not, there is something even worse than having to prepare your tax return. It’s finding out that someone else already filed a return in your name, under your Social Security number, to collect a fraudulent refund.

And that’s just the beginning of your troubles.

IRS VIEW: Our efforts are making progress

At best, it takes about six months for the IRS to resolve an identity theft case. At worst? It can take more than a year. All the while, victims wait for their rightful refunds, and thieves sometimes strike again.

Identity theft is a big and growing problem, and the crooks appear to be one step ahead of the IRS.

Last year, the number of incidents reached 1.8 million, J. Russell George, the Treasury inspector general for tax administration, told a Senate panel this week.

One of those victims, Marcy Hossli, of Lake Worth, Fla., testified the IRS notified her 13 months ago that her identity had been stolen and that refunds went to a thief for tax years 2010 and 2011. The agency promised a resolution in three months and a special PIN number to include with her next return. She’s still waiting for the PIN. Hossli e-filed her 2012 return on Feb. 21, but soon learned she was again the victim of a thief.

By now, the IRS ought to have a user-friendly process in place to untangle what is admittedly a complex crime. No such luck. The agency knows what’s needed and has set up several ambitious programs, but the follow-through is often inept:

In 2008, the IRS created a specialized unit intended to provide seamless service to victims. Since then, though, the agency has added 21 different units within its 21 “functions” to address such cases, with no “traffic cop” to direct efforts, according to National Taxpayer Advocate Nina Olson, a public ombudsman within the IRS. The agency is “moving backward,” she reported to Congress, increasing the chances that victims will fall through the cracks.

Though victims can call one toll-free phone line to report ID theft, they are not assigned a single caseworker and can be bounced among employees and forced to verify their identities numerous times. When George reviewed theft reports by 17 taxpayers, he found the IRS had opened 58 separate cases.

The IRS issues PIN numbers for victims to use when they file subsequent returns, identifying them as the legitimate taxpayer. Good. But the PINs are issued just once a year. If your case hasn’t been resolved by then, you’re vulnerable to theft again.

Helping victims, of course, is just half the equation. Prevention is the best solution to a crime that costs all taxpayers billions of dollars in fraudulent refunds. But even there, the IRS has missed obvious warning signs. In 2010, one address in Lansing, Mich., was used to file 2,137 returns. In a separate case, a single bank account was used to receive 590 direct-deposit refunds totaling more than $900,000.

Why didn’t IRS computers flag these oddities? Today, the IRS says it has better controls in place. Perhaps, but the system still isn’t working as it should.

After burglars stole a computer in December, tax professional Priscilla Diggs-Costen in suburban Atlanta realized that her clients would be vulnerable to ID theft. She called several offices at the IRS, seeking to flag her clients’ accounts. Sorry, she was told, they’d have to file separate theft affidavits. The IRS told one client she’d have to wait until she was a victim. Soon enough, she was.

Source: USA Today