An estimated nine million people each  year are subject to identity theft based on reports from the Federal Trade Commission.  This is certainly an alarming figure and this type of fraud can take many forms.  Thieves have been targeting victims to commit credit card, utilities and bank fraud.  Most people are aware that checking your credit score and monitoring other online banking reports help to determine if your identity has been stolen.

Your tax returns can be subject to fraud, as well.   Each year the IRS publishes the “Dirty Dozen Tax Scams” and the first scam on the list for 2012 was none other than Identity Theft.  These thieves, typically, file a return under a stolen identity to claim a fraudulent refund.  In a recent article in the NY Times written by Lizette Alvarez (link to the NY Times article), some light is being shed on the magnitude of this type of tax fraud.  So, what is the IRS doing to help mitigate the theft?

Well, the IRS is taking this matter very seriously by going as far as creating a specific task force called the Identity Protection Specialized Unit and increasing their own internal reviews to discover these falsely filed returns.  The IRS has joined forces with the Justice Department’s Tax Division and the U.S. Attorney’s office to help uncover these crimes across the entire U.S.

Even Congress is weighing in on the tax fraud.  Earlier this month, the House Ways and Means Subcommittee had a hearing to discuss the ways the Social Security Administration (SSA) can aid in this prevention process by limiting the information available in the Death Master File (DMF).  This file is available to the public to help medical research and benefits organizations confirm payments for deceased individuals.  Recently, the state and zip code of those who died were removed from the report leaving only the Social Security numbers, names, date of birth and death of individuals available on the DMF.  While limiting this information has been helpful more are advocating further limitations on the distribution of the DMF to help prevent identity theft.

In addition to the measures the IRS is taking to protect individuals, the IRS offers some guidance on how to determine if your identity may have been stolen for tax purposes.  First, the IRS is issuing notices if more than one tax return is filed for you or if a notice reflects records indicating you received wages from an employer unknown to you.  Also, if you feel you may be an identity theft victim or potential victim, you can file Form 14039, the IRS Identity Theft Affidavit, which puts the IRS on alert for your account.

There are many agencies at work to help protect us, the taxpayers.  For more information and further reading, please follow the links below:

1. The IRS Releases the Dirty Dozen Tax Scams for 2012

2. Taxpayer’s Guide to Identify Theft from the IRS

3. Helpful Resources from the IRS

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