If you haven’t yet filed your tax return, there’s another reason you might want to not wait until the last minute. A disturbing trend in identity theft is to steal a social security number and file a fake tax return and collect someone else’s refund.
It’s bad enough when someone steals your identity, but to have them steal your tax refund is like pouring salt on the wound.
Kim Gill’s tax nightmare started last year when she went to file her return at a Jackson Hewitt office.
“I got a call back about the next day, as a matter of fact, in mid-February, telling me that someone had already filed a tax return in my name, at another tax preparation service on the south side of Chicago,” says Kim Gill, tax fraud victim.
Someone had stolen her name and social security number and fabricated the rest of the information needed to complete the return.
“They made up fraudulent dependents. They said I had a daughter and a niece, which I do not and they put ad address down there that I think does not exist and a telephone number that is disconnected,” Gill says.
Gill spent the next 30 days reporting the tax fraud to various city, state and federal authorities.
“I contacted the Chicago Police Department, the IRS Criminal Investigation Division, the Federal Trade Commission. I contacted the Illinois Department of Revenue, I went to the Social Security Administration and contacted the three major credit reporting bureaus to put fraud alerts on my social security number,” Gill says.
And when she finally got her refund in September, some seven months after she went to file her return, Gill thought that was the end of it. And then the unthinkable happened, someone, perhaps even the same someone as last year, used her social security number to file another fradulent return this year.
“They came in on January 23 and did this. As soon as the doors opened for the IRS, they ran right in and filed another fraudulent return in my name with my social security number,” Gill says.
According to the IRS, identity theft and tax return preparer fraud is a growing problem.
“From 1999 to 2003, it has increased over 1000 percent,” says James Martin, IRS Criminal Investigation Unit.
And the move toward electronic filing and easier access to refund anticipation loans has only made the problem worse. But the surprising thing is how easily this taxpayer’s identity was stolen. This commercial tax preparer has been in the business for 28 years.
“I’ve probably done over 28,000 tax returns,” he says.
He says anyone who has worked for a commercial tax preparer would know how to access the computer system to easily poach a few names, social security numbers and employer identification numbers to create phony tax returns.
“Maybe they’re a disgruntled employee. Maybe they work at very low wages and they’ve worked around taxes for long enough to know how easy it is to go through some receipts, go through the garbage can, pick up information that’s not shredded, have all this stuff, maybe on the back of a business card and when it’s not busy, sit here and do the return themselves,” he says.
While it takes the IRS two weeks to electronically deposit your refund into a bank account, you can get your tax refund the next day through a refund anticipation loan, which basically a high-priced loan against the refund you’re owed. And now you don’t even need to wait for a cashier’s check. If you use one of the new cash card or debit card options, you can walk out of the commercial tax preparers office with the card in your pocket.
“A cash card can be charged in as little as 12 hours, so someone could be on the street with your refund that quickly,” he says.
The real question is, how could this happen twice? Doesn’t Jackson Hewitt or any commercial tax preparer, have any safeguards in place to prevent the fraud from occurring a second time? Coudln’t they have somehow flagged Kim Gill’s social security number so a fraudulent return couldn’t be filed? Apparently not. Jackson Hewitt did not respond to repeated requests for comment on this story, but responsibility also lies with the IRS, which also didn’t flag Gill’s social security number and never followed up with her about her case.
“Did you ever get a response from the IRS Criminal Investigation Unit?”
“No. And I tried to call the agent from the year before. He never returned my calls,” Gill says. “It usually is of so small nature to them that they just reissue another refund and it takes the poor customer an extra 5 to 7 months to get their initial refund. Which, to a lot of families that depend on that, can be crippling.”
Not to mention exhausting.
“It’s just draining. It affects your entire life especially having to deal with it time and time again. And sometimes you just want to cry because the situation is so beyond your control,” Gill says.
The only way to protect yourself from this sort of identity theft tax fraud is to choose your tax preparer as carefully as you would a doctor, lawyer or other professional.
So what happened to Kim Gill’s return?
I spoke with the IRS office of Criminal Investigation Unit today and they say they think they have the problem solved. but there’s no assurance. Unfortunately, Kim Gill won’t know until next year when she goes to file her return, and she says she’ll be the first in line and file in January.
IRS FRAUD HOTLINE (800) 829-0433
IRS GENERAL INFORMATION (800) 829-1040
CHECK THE STATUS OF YOUR REFUND: (800) 829-1954 www.irs.gov
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