Identity Theft of Taxpayers
A recent study was conducted by a National Taxpayer Advocate about a growing problem of identity theft. There have been many improvements made by the IRS in the last few years; however, it continually sees this problem.
What typically happens is that a taxpayer receives a notice from the IRS that they have underreported their income for a certain tax year. It comes from a company in a state where the taxpayer does not nor ever has worked or lived. Occasionally, it is easy to tell if wages belong to the taxpayer or not; such as the taxpayer is a five year old child. If not, this causes many delays in processing the return. The return is marked as “un-postable” and is required to be processed manually.
The National Taxpayer Advocate is working with the IRS to reduce the identity theft, however, there has not been any tools put into place to help the victims to prevent identity theft from occurring.
Taxpayers need to be aware of this situation in order to protect themselves from identity theft. If a taxpayer receives a notice from any government agency please forward it to our office so that we may review and respond immediately. Often times there is a perfectly legitimate reason for the notice, however, it will have a deadline date to respond, so in order to investigate possible reasons for the notice, it may take some time.
Employers should always collect the proper identification from new employees such as two forms of identification for the Form I-9; Employment Eligibility Verification to protect themselves and other taxpayers form identity theft.
Nina E. Olson, National Taxpayer Advocate on the threat to taxpayers hearing before the subcommittee on fiscal responsibility and economic growth, United States Senate May 25, 2011