Don't Mess With Taxes

It's tax filing crunch time and I know you have enough to worry about now if you haven't yet completed your return. Really. I've yet to file my own tax return.

Waiting to file isn't necessarily a bad idea. Giving yourself extra time means that you can double check things, make sure you have all the tax documents you need and that you don't miss any tax deductions or credits.

But there's one delayed tax filing worry that might not have crossed your mind. An identity thief might have filed under your name.

Federal Trade Commission data show that tax-related identity theft is increasing. In 2009, around 13 percent of identity theft was related to taxes. Now tax identity theft makes up 24 percent of all ID theft crimes.

Taxpayers who are ID theft victims usually don't discover the crime until they file their returns and then hear from the Internal Revenue Service that their names and Social Security numbers have already been submitted on a 1040.

The real taxpayer then is stuck having to prove he or she is the real taxpayer, eligible for the tax breaks.

Other types of tax ID theft: Another version of tax identity theft is when someone stills your Social Security number and uses at their job. They pocket the earnings, but because they are tied to your tax ID number, you're responsible for it, at least until the criminal situation is clarified to the IRS' satisfaction.

Finally, the stolen Social Security number of a child or other dependent is used by a crook to claim tax breaks related to that person. When you put their numbers on your legitimate return, the IRS will disallow the duplicate claim, even though yours is the correct one.

Let the IRS know ASAP: If you receive a notice from IRS regarding previously filed or duplicate tax claims, respond immediately.

If someone used your Social Security number fraudulently, notify IRS by responding to the name and number printed on the notice or letter. You will need to fill out the IRS Identity Theft Affidavit, Form 14039. 

And tax identity theft victims who have trying to resolve fake filings but who have yet to reach a satisfactory resolution, contact the IRS Identity Protection Specialized Unit (IPSU) toll-free at 1-800-908-4490.

Federal effort to halt ID theft: Also check out the IRS' special Taxpayer Guide to Identity Theft page.

In addition to the special identity theft unit, the IRS has increased its efforts to stem the crime and catch those responsible. This filing season it instituted new computer systems to catch return fraud, albeit with mixed success.

Congress also is getting involved.

The Identify Theft and Tax Fraud Prevention Act, S. 1534, was introduced last year by Sens. Bill Nelson (D-Fla.) and Dick Durbin (D-Ill.). The bill would increase penalties for tax fraud, give victims of identify theft unique PIN numbers to use on their tax returns, and let people opt out of having to file their returns electronically.

The bill also increases IRS resources for tax fraud prevention.

As tax-related ID theft has been increasing and the 2012 filing deadline nears, the bill is getting a bit of added attention.

You also might find these items of interest:

• IRS, Justice Department ID theft crackdown
  nets criminals nationwide
• IRS stopping more tax fraud attempts
• $1.4 million refund stolen by ID thief