IRS Playing Catch-Up With Tax Time Identity Thieves

Scammers are outflanking authorities investigating tax-time cases as complaints soar.

IRS Playing Catch-Up With Tax Time Identity Thieves

This post comes from Christine DiGangi at partner site

Tax-related identity theft was the most common complaint consumers filed with the Federal Trade Commission in 2014, as it has been in previous years, and the number of complaints increased more than 2,300 percent — no, that figure isn’t missing decimal points.

Those complaints cover all sorts of things, from reports of callers impersonating the Internal Revenue Service to people whose Social Security numbers were used to file fraudulent tax returns. The latter is a particularly frustrating experience for consumers, who then have to worry about the fact that their Social Security numbers have been compromised, not to mention the time and money it may take to straighten out their taxes and get any refund they rightfully deserve.

In 2012, the IRS started a program to help consumers and law enforcement investigate matters of tax-related identity theft, and in 2013 it expanded from its pilot status in Florida to a nationwide effort, the IRS Law Enforcement Assistance Program (LEAP). The Treasury Inspector General for Tax Administration (TIGTA) audited it and recently released a report on the program.

Spoiler alert: The IRS isn’t doing a great job with it.

Here’s a quick overview of the program, before we get into the problems the IRS has had executing it: Law enforcement officers use Form 8821-A, IRS Disclosure Authorization for Victims of Identity Theft, to get victims’ permission to request their tax information from the IRS. That information is used by law enforcement to track down scammers and resolve identity theft cases. The audit investigated the speed, accuracy and security with which those forms were processed by the IRS.

Between Jan. 3 and Sept. 27, 2013, the IRS processed 2,481 of these forms. TIGTA audited a statistically representative sample of them (194 to be exact) to see how LEAP was working.


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