Can You Trust Your Government With Your Vital Information?

One of the most intimidating experience of my life was years ago when I was "asked" to come down to the local IRS office to explain some of my office expenses.  The results were OK (I had received bad advice from an accountant) and the examiner was civil but I still remember the sweaty palms and sleepless nights preceding the exam.  It makes a colonoscopy seem pleasant!

However, one can only imagine how it would feel to think that you were going to get a refund and find out that the return had been stolen.  This is occurring to taxpayers more and more each year and the increase is not single digits.  From 2008 to 2010 the increase was nearly 500%, that is five times more than two years prior.  This is not some petty criminal activity but I have to assume that there has to be an organized crime attack on the IRS. What is happening? One can only guess as the IRS prosecuted very few of these criminals so it seems that the pain and discomfort it causes the taxpayer is inconsequential.  This is your friendly, warm and feeling government at work. Wrong!

The crime against the taxpayer is compounded when the real victim has to prove who they are and that the IRS really owes them the refund. I can imagine the poor slob sitting at  the metal desk in the windowless room  with the bare bulb suspended above him being questioned by the IRS agents. Both agents ( a man and a woman) assuming that the taxpayer must have done something wrong to lose his refund. It is obvious to them that he must be wrong as the IRS would never do anything wrong.  Hey, that could be a movie!

Unfortunately more and more people are being subjected to this problem and I doubt that the trend line will decrease for two reasons.  The first is that the IRS has the money (that's why Willie Sutton robbed banks) and secondly, they don't prosecute those who they catch.  So how long will it be before the government takes action?  I hope soon for if this trend continues no refund will be safe.

So, if the government cannot keep your refund out of unscrupulous hands, how are they going to keep your medical records out of the same enterprising criminals? How would you like to find out that someone had stolen your medical information and had had an operation to, say, remove an organ. You go in sometime afterward with the same complaint and they refuse you because, that operation had already been done.   How would you prove it?  And how many layers of bureaucracy would you have to go through. And how agreeable and helpful would those government workers be?  Probably as helpful as your local IRS agent is.

We are in trouble. The government cannot keep refunds out of bad guys hands and we want to let the government control 15% of the economy with Obama Care. We must be nuts.

The article that follows contains more information on this major issue that has not been seen anywhere but here and in an AP posting.

AP NewsBreak: Taxpayer identity theft is soaring

AP NewsBreak: IRS grappling with soaring taxpayer identity theft; sharply up from 2008 to 2010

Larry Margasak, Associated Press, On Wednesday June 1, 2011, 4:02 pm EDT

 

WASHINGTON (AP) -- Imagine filing your tax return and learning that someone else got your refund. With your name and Social Security number, no less.

The IRS is grappling with a nearly five-fold increase in taxpayer identity theft between 2008 and 2010, a Government Accountability Office official plans to tell a House hearing Thursday. There were 248,357 incidents in 2010, compared to 51,702 in 2008.

The GAO findings, obtained by The Associated Press, don't begin to describe the pain for a first-time victim, who must wait for a refund while the IRS sorts out which return is real and which is a fraud.

Many identity thieves don't get prosecuted, according James White, director of strategic issues for the GAO..

"IRS officials told us that IRS pursues criminal investigations of suspected identity thieves in only a small number of cases," White says in testimony prepared for a House Oversight and Government Reform subcommittee.

He said that in the 2010 fiscal year, the IRS criminal investigations division initiated just over 4,700 investigations of all types -- far less than the identity theft cases alone.

"We want to know why this problem is apparently getting much worse," said Rep. Todd Platts, R-Pa., chairman of the subcommittee. "By bringing these issues to the public as quickly as possible, the committee hopes to give citizens the necessary information so they can protect themselves from such identity theft."

IRS Commissioner Douglas Shulman, in his prepared statement, defended the criminal investigation record. He said his criminal division concentrates on schemes of national scope and added that 95 percent of those prosecuted for refund-related identity theft go to prison.

Tax identity thieves typically submit returns for refunds early in the filing season. The legitimate taxpayer usually files later, and only then learns from the IRS that two returns were filed using the same Social Security number.

Some thieves steal a name and Social Security number to obtain a job. The employer will report the thief's wage information to the IRS, as would the legitimate taxpayer's employer. The victim then would receive an unwelcome IRS notice that he or she failed to report everything that was earned. The victim would then need to work with the tax agency to sort things out.

Shulman said the IRS can significantly increase its protection after someone has been victimized the first time.

One victim, LaVonda

She had to make rounds of calls to the IRS and other government agencies, sometimes repeating the same information. She spoke on the phone with an IRS employee she described as "the most rude and discourteous person I have ever spoken with in my life."

She was told her refund would take 16 weeks to six months.

She closed her bank accounts and opened new ones. She ordered new checks. She placed a 90-day alert on her credit reports. She often has to show her IRS identity theft affidavit.

"You may not be able to know how stressful this has been," she said in her statement. "I can't sleep. I wonder what the person will do next as far as trying to get credit cards or anything in my name."

Tax form 14039, the IRS Identity Theft Affidavit, allows the agency to mark an account to identify future questionable activity. A task force of the IRS and other agencies established a website, STOPFRAUD.gov, which tells taxpayers what to do if they suspect identity fraud.

The main IRS website includes "Ten Things the IRS Wants You to Know About Identity Theft."

If the IRS receives multiple tax returns for the same individuals, the taxpayer usually must substantiate identity with a federal or state-issued identification such as a driver's license or passport -- together with a copy of a police report or the IRS affidavit.

This past January, the IRS developed a pilot program designed to lessen delays for victims who deserve a refund.

Victims are issued an "identity protection personal identification number," which the IRS will use to process future returns. A new PIN will be issued each year the taxpayer's account has been marked for potential fraud.