Having a fraudulent tax return filed under your social security number with a tax refund directly deposited into the fraudster’s bank account tops the IRS’ 2014 list of tax scams affecting U.S. taxpayers.  According to the IRS in their press release on the Dirty Dozen Tax Scams for 2014:

Identity Theft

Tax fraud through the use of identity theft tops this year’s Dirty Dozen list. Identity theft occurs when someone uses your personal information, such as your name, Social Security number (SSN) or other identifying information, without your permission, to commit fraud or other crimes. In many cases, an identity thief uses a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund.

The agency’s work on identity theft and refund fraud continues to grow, touching nearly every part of the organization. For the 2014 filing season, the IRS has expanded these efforts to better protect taxpayers and help victims.

The IRS has a special section on IRS.gov dedicated to identity theft issues, including YouTube videos, tips for taxpayers and an assistance guide. For victims, the information includes how to contact the IRS Identity Protection Specialized Unit. For other taxpayers, there are tips on how taxpayers can protect themselves against identity theft.

Taxpayers who believe they are at risk of identity theft due to lost or stolen personal information should contact the IRS immediately so the agency can take action to secure their tax account. Taxpayers can call the IRS Identity Protection Specialized Unit at 800-908-4490. More information can be found on the special identity protection page.

This Fraud is a Real and Growing Problem

Unfortunately, this scam is a real and growing problem for U.S. taxpayers.  At my office, we experienced this fraud firsthand as a handful of the 2,000+ individual tax returns that we e-filed this past winter were rejected because the IRS had already received a fraudulent tax return that included the scammed client’s social security number. 

To make matters worse, the scammers appear to be targeting healthcare professionals.  Check out this article by Donna Goodison that appeared in the Boston Herald on April 23, 2014 titled Doctors Targeted in Tax Return Scheme

What Should You Do?

If you were a victim of this fraud, please try to be as proactive as possible to minimize collateral damage to your personal finances.  Hopefully, the extent of the damage is limited to the fraudulently filed tax return using your name and social security number. 

Your first step should be to read through the IRS’ Taxpayer Guide to Identity Theft.  I also strongly recommend that you take advantage of the free fraud prevention services offered by the three credit reporting agencies.  You can start this process atwww.annualcreditreport.com, an informative, objective, and free website maintained by the three credit reporting agencies.

The IRS acknowledges that this is a large and growing problem, and is taking steps to protect U.S. taxpayers. Per their January 2014 press releases“The IRS understands that identity theft is a frustrating, complex process for victims. While identity thieves steal information from sources outside the tax system, the IRS is often the first to inform a victim that identity theft has occurred. The IRS is working hard to resolve identity theft cases as quickly as possible.  We are also developing programs and information to protect the taxpayer from future misuse of their personal information impacting their tax administration and minimize the impact outside of IRS.”

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