Beware Of Identity Thieves Filing Fraudulent Tax Returns To Steal Your Refund

So you finally drag yourself to your desk/computer/accountant and get your taxes done. Good job. Now wouldn’t it just totally stink if you found out someone had already filed a tax return using your information, and that they’d snagged whatever refund you had coming to you? Yes, it would, which is why the Internal Revenue Service is warning people of just such a scam.

KDKA in Pittsburgh reports on the scam, which is happening enough that the IRS has set up a hotline for any victims of it.

All a thief needs is your name, address and social security number, says IRS Special Agent Andrew Hromoko.

“It’s not really your refund,” said Agent Hromoko. “It’s a completely bogus tax return that may contain all sorts of fraudulent information.”

What’s worse is that until the issue is resolved, you won’t get your refund. And that is enough to make anyone cranky.

Another scam to keep your peepers on is a tax preparer who bulks up your return with fake information to get you a larger refund. If you are aware they’re doing so, you can be charged as well.

Agent Hromoko advises staying away from tax prepares who base the amount they charge on what your refund turns out to be, and they should be willing to sign the form.

Previously: IRS Warns Against Tax Scams

Identity Thieves Filing Bogus Tax Returns [KDKA]

Comments

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  1. Hi_Hello says:

    how is the refund getting to the thieves? Tax refund check mailed to your address?

    • Kaleey says:

      Direct deposit, of course.

      My guess is that you could also be subject to an audit based on that information which would EVENTUALLY be thrown out because you didn’t file the return. Bet the IRS wouldn’t have a problem dragging their feet to do it, either. I can see this being a nightmare for anyone who winds up a victim to this scam.

      • Hi_Hello says:

        the articles said the guy used dead people… I can see taking checks from dead people.

        but direct deposit… are the IRS just dumping money into any bank account without verifying the name on the account?

        If the name is a stolen name… how do you create a bank account with someone’s else info? Fake driver license? I haven’t open a bank account in awhile.. i don’t remember the process.

      • Cat says:

        Stupid criminals would use direct deposit, because they can be linked to the account.

        Smart criminals (oxymoron?) could be using a refund anticipation loan.

        But, that’s just speculation, I would also like a definitive answer to this question.

  2. Nidoking says:

    So if someone steals my identity and files my taxes for me, I’m off the hook for filing my own, right? That’ll save some time.

    As for refunds, I usually end up paying, so that identity thief is welcome to handle that for me.

    • etz says:

      ‘cept the scammer enters a boatload of deductions and credits that you aren’t really entitled to until it looks like you are entitled to a refund (which they then take)

  3. Bsamm09 says:

    Had it happen to a couple of clients over the years:

    http://www.irs.gov/pub/irs-pdf/f14039.pdf

  4. glasswright says:

    I honestly don’t understand how everyone is getting refunds. I know I have only done taxes 3 times, and it was all on scholarship money, but even with the education credits, I end up paying like $200 each time. how is the government funding anything if they have to give all the money back every tax season?

    • Hi_Hello says:

      hmmmm i wonder if I did my taxes wrong back in college…

      I don’t think I ever reported scholarship money as income. I never saw any of the money.. I just get the final bill from my school after all the grants, loans, and scholarship are factored in.

      I have heard of people getting checks from scholarship and grants. My guess those count as income and you get taxes on it.

      The only time I had to pay taxes was when I was getting a extra chunk of money on the side each for a few years because of some side jobs I was doing.

      • frugalmom says:

        You only pay taxes on scholarships used for living expenses. Scholarships paid directly to the university for tuition isn’t taxed. I just had to double check this because of my DH’s scholarship.

    • ahecht says:

      People with jobs (not scholarships) have income tax withheld from their paychecks every month. Most refunds are a refund of an overpayment — that is, too much was taken out of your paycheck each month, so the IRS is returning the extra. People like giving the IRS an interest free loan and waiting until next April to get the money back because the thought of underpaying the IRS and then sending in a large check in April is scary. Personally, I adjust my withholding so that I get the maximum amount in my paycheck and have to pay the maximum at tax time (if you owe too much at tax time there is a penalty, so I aim for 90% of the penalty-free amount).

    • Nigerian prince looking for business partner says:

      I think most people get large refunds as a result of not updating their W-4 when they get married or have kids, or they just blindly put one or two withholdings on the form.

      • tingeyga says:

        I think it is slightly more complicated than that. I think that people adjust their W-4s, but that only impacts their withholdings going forward, not what you had down prior to getting married or adding children to your family.

        (Yes, you can tweak your exemptions to account for if you have a child in say November, but doing that also means that you will need to change them back at the beginning of year which is extra work and not something that I think is worth the hassle)

    • tbax929 says:

      Seriously? In all of my years of working (I’m pushing 40), I’ve always received a refund. I try very hard not to get one, as I’m not a fan of loaning my money to the government, but I find it tricky to do, especially since I have assets and deductions.

      I should probably sit down with a CPA and figure out what I need to do on my W-4 and with my pre-tax deductions in order to make me come out even every year. I tried increasing my number of exemptions for 2011 and still ended up with a refund of more than $3,000.

      • tingeyga says:

        Why talk to a CPA when the IRS has a calculator that will help you do the same thing?

        http://www.irs.gov/individuals/article/0,,id=96196,00.html

        • tbax929 says:

          Thanks for the tip. However, my taxes are a little more complicated than that. I have a lot of investment income, charitable donations, property, etc. I should have hired one a long time ago, but I’ve done my own taxes for so long I can’t fathom paying someone else to do it. But I really should.

    • Sunflower1970 says:

      I’m with you on this. I ALWAYS have to pay. Average is about $1000 every year. I’ve double checked to make sure I’m having the maximum taken out, and husband is, too. We make roughly $65K/year combined, so in no way are we rolling in dough.

      We don’t have kids, or a mortgage, so maybe that’s why, no real deductions, but it never fails. We have to pay. It’s really frustrating.

      • bhr says:

        I feel like you aren’t taking all your deductions at the end of the year, or taking too many during the year, to wind up paying with a salary in that range. I try to come close each year and still usually get $800-1000 each year (mainly feds) without having a home credit. Last year was the first year I owed a chunk of money, but that was because I didn’t account for some secondary income that didn’t have taxes taken out.

      • Not Given says:

        One of you have payroll take out an extra $100/month for taxes, there is no maximum. You can claim no exemptions and still pay extra, payroll should know how to do that. Or put that much into your bank account and pretend you don’t have it so you’ll have the money saved up next year.

    • dru_zod says:

      I know a couple of people who make very little, and pay practically nothing in taxes during the year, and yet they still get a refund. One of them said they got more back in their refund than they actually paid. That’s not a refund, that’s just free money! They get some type of credits or something, which I don’t understand because I’m not an accountant and never will be. But it seems very odd to me that people can get more back than they even paid.

    • Awesome McAwesomeness says:

      We purposely pay at the end of the year. February, March, and April are months where we generally have the lowest expenses, so it isn’t too hard for us to come up with the money to pay our bill.

  5. Hotscot says:

    How do you prevent this?

  6. Invader Zim says:

    Wouldnt they get caught via the bank acct they tried to cash it with. Even check cashing places require id.

  7. voiceofreason says:

    Refund??? HAHAHAHAHAHAHAHAHAAAAAAAAAAAAA

  8. Lyn Torden says:

    IRS FAIL … they should know better. Just because someone can state (or write down) a given SSN, that does not mean the person doing so is the person to whom the SSN is issued. All the IRS needs to do to verify this is to be sure you are you. Now the problem is they really don’t know how to do that.

    Remember, ALL issues of ID theft are due to someone ELSE believing that who has the number is actually YOU. They ARE all part of the problem for believing that. This needs to change.

  9. SporadicBlah says:

    I know two people this has already happened to this year. Could take months to get the personal information from the IRS just to find out who did it.

  10. aabacus says:

    Happened to me last year. I tried to file in February but someone had already filed under my SSN. I got my refund, and interest, in November last year. This year they gave me an ID that I have to use to file under. Without that specific number the return won’t go through.

    Point to note–I got to work with a taxpayer advocate to solve the problem after not getting too far with two other agents. The entire process was long but everyone was polite and knew enough of their job to get me handed off to the right people. I also have to say that my taxpayer advocate was awesome to work with. Seriously! I wish I got that kind of service from other companies.

    Not saying I want to repeat the ordeal but it worked like it was supposed to.

    Important note: BE NICE TO EVERYONE. I found that being genuinely understanding and patient as well as prepared made it a much better experience. If you start off angry and disorganized you’ll have nothing but trouble.

  11. Nogard13 says:

    This happened to me two years in a row (due to wifey’s investment manager getting us her paperwork late, like in April late). They withheld my refund and wouldn’t even tell me why.

    This year, the IRS sent me a letter with a 6-digit PIN and stated that I needed to use it when filing electronically to prove I’m me. This is great, but the letter specifically read that I wouldn’t need it if I filed by snail-mail. I hope the dumbarse who tried to steal my identity two years in a row isn’t mailing it in (but I should still get my refund when I e-file with my PIN).

  12. Sad Sam says:

    This is why I don’t give out my SS # to anyone who doesn’t need it by law. I’m talking about you Dr. Dermatologist office who wouldn’t give me an appt. if I didn’t hand over my SS #. Guess what, I’ll find another doctor thank you very much.

  13. maxamus2 says:

    If someone has your name, address and social security number you are in a world of hurt anyway, and it will probably be worse than just losing your refund. Opening multiple credit cards then charging thousands of dollars immediately. Not only will it take you a very long time to prove it wasn’t you to the companies, it will take a very long time clearing that up on your credit report.

  14. nekosaur says:

    How ironic that this has been posted to Consumerist.
    This happened to me – I found out last week. Here’s the story:

    Had my taxes ready on 1/16. I file early so that I can get it out of the way. I usually receive a small refund, but try to keep my taxes balanced so that I can break even if possible.
    Could not file in January as I had to wait for an E*Trade 1099 “stock sale” tax form. They were delayed this year until 2/15. One month of waiting for a single form. Received the 1099 form on 2/15 and entered the information.

    Attempted to e-file using TurboTax. All forms passed verification but the e-file system came back with an error reporting that I had “already filed 2011 taxes under a duplicate social security number.” The IRS error did not let me know which SS# was already on file (I have 4 family members.) Called the IRS helpline and was told that I needed to immediately call the following departments:

    • IRS Fraud Hotline
    • The Federal Trade Commission
    • Social Security Administration
    • One of the 3 credit agencies (Experian, Equifax or TransUnion)
    • The local police to file identity theft complaint and give the case # to the FTC.
    • The closest IRS Governmental facility to verify identity in person

    It was confirmed by the IRS that someone filed taxes this year already using a Social Security number, name and address of someone in my family. Most likely, it was mine since I am technically head of household. They could only tell me that the submission was done on 1/25/2011 and that a large refund was issued to either an account that I had not used before.

    2 days passed and I had already invested over 16 hours of phone time and face-to-face time with several Agencies, Federal Agents and law enforcement officers.

    The process is a nightmare. There are affidavits that need to be filled out and filed – there are interviews to confirm identity. You get a nice visit from the police. Nobody trusts you at all, especially over the phone, until you can prove that you are YOU. The most recent action I have taken is to drive to the Federal IRS building in my state (a 150 mile trip) to personally file my 1040 taxes in person with an affidavit and as much identification as I could possibly get (license, passports, Social Security Card, voter ID, even a current utility bill!)

    Some facts:
    • I will most likely not receive this years return. If I do, I have been told that the soonest would be late fall of 2012 early 2013. A complete investigation takes a LONG time before they choose to process your return. I should not expect any updates for several months.
    ‚Ä¢ An IRS Fraud agent told me that personal information has been getting stolen “behind the scenes,” ie: a nefarious employee of a company skimmed my information from internal company systems that had my information.
    ‚Ä¢ I am very, very careful about issuing my Social Security or any personal information as any good reader of the Consumerist has been taught to do. I don’t believe that this is where my information was stolen. I control this information well.
    • The agents have ALL been very nice and caring, especially the IRS Fraud department. The lady on the phone there talked with me for over an hour on how to prevent this in the future (all good advice that most people should abide by.)

    Some advice and additional information that I was told from the FTC and IRS – your data is not safe. Period. You can go to great lengths to ensure that YOU are not giving out critical personal details, but there is no guarantee that your information is not being taken on the back-end, which in my opinion appears to be the case here. The IRS does not need much to process and approve a refund. Someone doing this only needs your Name, Social Security number and address to pull this off. That’s it. They will file as early as possible so that you do not have time to beat them to it. If I did not have to wait for E*Trade, this would not have happened. Any information can be entered on the 1040 – amount made, deductions, children claimed, medical expenses, new home or car credits… they claim it all to get the maximum refund sent to them under your name. Auditing processes also do not help due to the fact that the IRS does not start auditing til months later. They just cannot catch this early. Funds are usually reimbursed to VISA gift cards that are issued through online tax preparation software and are cashed out quickly.

    So – there you go. This issue has been skyrocketing. You know its bad when a Governmental agency has to quickly set up an emergency line to handle the issue. The IRS agent that I sat down with told me that “I guess thieves have figured out that they can do this and get a LOT of money. The word is out.”

    File your taxes, folks – don’t wait! If this happens to you… I’m sorry.

  15. u1itn0w2day says:

    I know people with a Hispanic last name had their ID stolen 3 times and trouble getting a refund. The IRS told them for starters file paper return only. I don’t know if they were using direct deposit but they were told no more E returns for awhile anyway.