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Taxpayer Identity Theft Cases Soar

By Patti Petitte
|  Thursday, Jun 2, 2011  |  Updated 3:11 PM EDT
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Taxpayer Identity Theft Cases Soar

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It can seem like forever waiting for your tax refund, but for some abiding taxpayers it may never come. Instead the tax refund went to a complete stranger pretending to be you.

The Internal Revenue Service is looking at soaring taxpayer identity theft cases. In 2010, the IRS identified almost a quarter-million incidents. That’s almost five times the number compared to two years ago. Thursday IRS Commissioner Douglas Shulman testified before Congress about the increasing number of thefts.

The United States Government Accountability Office explains when refund fraud occurs, an identity thief uses a taxpayer’s name and Social Security number to file for a tax refund. The IRS discovers the fraud after the legitimate taxpayer files.

Identity theft can also take place in employment fraud, when a thief uses a taxpayer’s name and SSN to obtain a job. Then, when the thief’s employer reports income to the IRS, the taxpayer appears to have unreported income on his or her return.

If you receive a letter from the IRS, be alert to possible identity theft if it states more than one tax return filed in your name or indicates you received wages from an employer you do not know.

In an effort to protect taxpayer’s identity, the IRS said the government is working to identify ways to authenticate taxpayers without the full use of their Social Security number.


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