Identity Theft: The Most Common Tax Scams

Last updated on April 2, 2013

Attempting to steal the identities of taxpayers to file false returns and claim huge refunds is a tax crime most taxpayers will encounter during tax season. Identity theft efforts are made both online and offline by identity thieves.

Tax frauds use fake websites and unsolicited emails that are exact replicas original IRS and financial institutions to extract tax information from taxpayers. Only the name has been changed on the fake website, while all content is exactly the same. Taxpayers can rarely tell the difference.

Tax thieves use tax information, especially Social Security numbers, dates of birth, names, and tax filing statuses, to file false tax returns. To get their tax returns to the IRS before the taxpayer, scammers file early in the tax season. When the taxpayer files their return, it gets rejected by the IRS quoting a previous filing. It is only then that a taxpayer discovers the theft.

Due to the increase in identity theft, the IRS has begun a nationwide expansion of their Law Enforcement Assistance Program that now includes 50 states. According to the IRS, “the program (is) designed to help law enforcement obtain tax return data vital to their local efforts in investigating and prosecuting specific cases of identity theft. More than 1,560 waiver requests have been received since the Law Enforcement Assistance Program’s inception from over 100 state and local law enforcement agencies in the nine states participating in the pilot. The expansion covers all 50 states as well as the District of Columbia and will be effective Friday, March 29, 2013.”

Considering the increase of identity theft, the IRS is taking steps to reduce the crime with the help of investigative agencies. It is also using technology and manpower to fight other kinds of tax crimes. They are hopeful in bringing down the tax crime rate for 2013.