Identity Theft – Finally a Little Help From the IRS?

In June of 2015, the IRS acknowledged that over 100,000 tax payers information had been stolen from IRS databases and used to file over 13,000 fraudulent returns, resulting in more than $39 Million in fraudulent refunds to these same fraudsters. But when victimized taxpayers asked for copies of the fraudulent returns (which included much of their private information), the IRS refused to disclose the information citing privacy concerns? Yup, I’d say that was more than lame!

And it gets better – in August of this year the IRS acknowledged that another 220,000 tax payers information had also been compromised. The computer hackers were able to bypass security measures at the IRS to obtain access to past tax returns and other confidential taxpayer information which they then used to file additional fraudulent returns.

The IRS policy and its implementation hit the news and drew the attention of Republican Senator Kelly Ayotte from New Jersey, who applied pressure to the IRS and finally the IRS has acted. It recently announced that it has changed its policy and will now provide copies of fraudulent returns to taxpayers who make a written request and provide proof of identity (driver’s license or passport for example). The IRS indicates that some information will be blotted out on the returns to prevent disclosure of private information – an indication that the IRS is still trying to save face.

But at least there’s now some way of getting copies of the fraudulent information that was filed. Perhaps as Congress applies further pressure, the IRS may even provide victims of tax fraud with the full details of what was fraudulently filed on their behalf. It appears evident at this point that the IRS isn’t likely to take those steps on its own.