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No one is safe from tax identity theft, not even the lawmakers who help write the country’s tax laws.
Another member of the House Ways and Means Committee has become a victim. During a hearing of the committee’s Oversight Subcommittee on April 19, Rep. Jim Renacci, R-Ohio, told his colleagues about having his identity stolen and a fake tax return filed in his name.
Rep. Jason Chaffetz, R-Utah, a former chair of the Ways and Means Oversight panel, also was a tax identity theft victim.
Fake return seeking ‘significant’ refund
This week Renacci shared his tax identity theft experience as part of a hearing on the just-completed filing season.
“Last May, I received a notice from the IRS stating that they had some questions for me about my 2014 tax return,” Renacci testified. “I found this troubling because I had not yet filed.”
Renacci contacted the IRS and learned that his personal information had been stolen and was used to e-file a fraudulent tax return. The filing, said Renacci, included a fake W-2 from the U.S. House of Representatives and claimed a significant refund.
The false return instructed the fraudulent refund be sent to a bank account outside the United States. Fortunately, the IRS spotted some red flags on the filing and didn’t issue the refund check.
E-filing makes ID theft easier
“As a taxpayer and tax preparer for almost 30 years, it is apparent to me that identity theft is real,” Renacci said.
And one of the conveniences of filing — submitting a return electronically — can also cause significant issues related to identify theft, he told the subcommittee.
“Let me be clear, I don’t want to return to paper returns and checks, but the ease of electronic filing and payments have exacerbated the problem. I know, now more than ever, we need additional safeguards to protect taxpayers,” said Renacci.
To address his and other tax identity theft victims’ concerns, Renacci has introduced the Stolen Identity Refund Fraud Prevention Act of 2015. During his testimony, he urged his fellow Ways and Means members to act on the bill.
IRS making progress against identity theft
IRS Commissioner John Koskinen also testified at the hearing, telling subcommittee members that his agency is making progress against tax identity theft and refund fraud.
“We have improved the filters that help us spot suspicious returns before they can be processed,” Koskinen said. “Using those filters, we stopped 1.4 million returns last year that were confirmed to have been filed by identity thieves.”
The filters helped the IRS prevent issuance of around $8.7 billion in fraudulent refunds, according to the commissioner.
The IRS also is working with tax ID theft victims. Last year, said Koskinen, the agency worked with affected taxpayers to close more than 700,000 fraud cases.
$119 million in fake refunds stopped
Koskinen also reiterated the efforts of the Security Summit, created last year to coordinate tax identity theft and fraud prevention efforts across state governments and the tax services industry.
“Our collaborative efforts are already showing concrete results this filing season,” Koskinen said. “Through mid-March, leads from industry partners directly resulted in the suspension of 27,000 returns on which a total of $119 million in refunds was claimed, up from 8,000 returns claiming $57 million during the same period last year.”
If you find yourself in the same situation as Renacci and other identity theft victims, don’t rely on just the efforts of the IRS and its tax industry partners. Secure your personal data as soon as you suspect or discover it’s been compromised.
Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York. He provides guidance and strategies to improve clients’ financial well-being.