Internal Revenue Service’s (IRS) growing concern against the problems of identity theft and fake refund claims resulted in a few effective measures taken for elimination of these issues. With its efforts that began from 2011, IRS has managed to identify and stop 19 million doubtful tax returns while saving more than 63 billion dollars to be paid in fraudulent refund claims.

The figure seems good but still, with this prevented amount, IRS had paid around 5.8 billion dollars in fraud refunds in 2013. According to a report issued by the Government Accountability Office, IRS is afflicted by budget cuts and is facing all the typical tax season issues coupled with an increased demand of dealing with fake tax refunds filing issues. The report noted that the burden on IRS is becoming worse day by day and further changes are needed.

Moreover, the report stated that IRS is making every effort possible to authenticate taxpayers. According to estimation from IRS, it has recovered around 24.4 billion dollars by identifying fraudulent tax refunds in 2013. Still, more than 21% fake refunds went unidentified and were later realized as fraudulent. There may also be fake refund claims that were never identified; so in fact, IRS is not sure about how much it pays in fraudulent refund claims every year.

Government Accountability Office has recommended Internal Revenue Service to improve its fraud assessment and its core analysis. IRS agreed to this and made a few changes in its individual taxpayer identification number (ITIN) issuance procedure to limit use of this tax identity number in filing of fake refund claims.

In addition, IRS has also suggested tax identification number holders to protect themselves in order to improve the integrity of the taxpaying system. Basically an identity theft refund fraud arises when a thief utilizes a legal taxpayer’s identity information to file a fake income tax return and claim a refund on it. IRS stresses that the public needs to ensure maximum protection from their end.

Have a look at IRS suggestions for taxpayers to protect themselves.

  • Don’t carry your social Security card or any document having your social security number or ITIN unnecessarily
  • Make sure your financial information is highly protected.
  • Keep a check on your credit report at least once a year.
  • Don’t share your SSN or ITIN with everyone upon asking. Produce it only on a definite requirement.
  • Analyze all your Social Security Administration earning statements properly.
  • Ensure the protection of your personal computers by installing firewalls or anti-virus software in them. This will help you protect your bank account information and passwords.
  • In case you receive any notice from IRS that more than one federal tax return has been filed in your name or any other issue related to a tax return you never filed; report it immediately to the IRS office.
  • If you have become a victim of tax identity theft; then report it to the local police station and contact a credit bureau that will put a ‘fraud alert’ on your account.

Being an ITIN or SSN holder, it is also your responsibility to play your part in prevention of tax-related identity theft crime.

If you need more information about our accounting and tax services, please contact us at 407-502-2400. Freedomtax Accounting’s staff has been providing honest accounting services and tax services for 15 years. Our Orlando accounting and tax firm has its main offices in Kissimmee, FL. Our services are provided nationwide, but mainly in the Central Florida market to areas like Orlando, South Orlando, Kissimmee, St. Cloud, Poinciana, Clermont, Davenport, Hunters Creek, Lake Nona, Celebration, Winter Park, Windermere, Dr. Phillips, Maitland, Altamonte Springs, Winter Garden, Ocoee, Apopka, Belle Isle, Edgewood, and Oakland FL. Our tax accountants and IRS enrolled agents (irs ea) specialize in corporate accounting and bookkeeping, tax services, tax preparation, back taxes help, tax debt relief, tax resolution, tax planning, itin number, incorporations, and non profit 501c3 tax exempt.

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