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February 15, 2012

Tax Refund Identity Theft

Its that time of year again.  Millions will file their tax returns between now and April 15.   An increasing number of those tax return filers will find to their dismay that their refunds have already been swiped by an identity thief.

The scam is pretty simple.  Identity thieves forge tax returns using your identifying information.  All that has to happen is that the Social Security number must match the name on file with the IRS.  The address does not have to match, since the person could have moved since the last tax return was filed.  The identity thieves use this loophole to provide an address that they can use to pick up the tax refund.

By filing these forged tax returns early and using bogus income totals that result in a refund, the identity thieves receive the refunds before the unsuspecting victim ever files his or her return.

If this happens to you, immediately contact the IRS.  They will provide you with the appropriate forms to dispute the fraudulent tax returns and obtain your rightful refund (assuming you are eligible for a refund).  Also, only use reputable tax return preparers, as a lot of this type of identity theft seems to occur when less than professional tax return companies are used the year before.

The IRS has allegedly stepped up its efforts to prevent this type of identity theft.  They have allegedly added some "filters" to the screening process that will supposedly catch this fraud at the outset.  I hope this is true as I have seen a marked increase in calls to my office about this type of identity theft.  And, unfortunately, there is usually no legal recourse that I can use to help these victims (unlike victims of traditional identity theft) so its up to the IRS to take measures to protect the public from this type of fraud.

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