Forget about millions, we are now looking at Billions in tax payer’s money gone to criminals. Mind you, the billion amount has a big fat “S” on the end of it!

A very interesting article titled “Identity thieves will rake in billions in stolen tax refunds this year” at states that, “For the past five years, the IRS has received negative audits from the Government Accountability Office for ongoing security weaknesses that could compromise sensitive taxpayer information” – some of these statements were from the prepared testimony of J. Russell George, the Treasury Department inspector general for tax administration himself.

This article goes on to say that a significantly greater amount of returns based on false income get through than the amount prevented and/or detected by the IRS. And that many of these false returns or fraudulent returns are forged by IRS employees.

And damn, “The IRS does not analyze much data from identity theft cases for patterns that could be followed to prevent future refund fraud.”

All I can say is “Nice” and Really?

Not to mention, their (IRS) computer vulnerabilities are deplorable.

More about that gem here: IRS plagued by computer vulnerabilities five consecutive years

Read and download the last two IRS audits for yourself: (click on link and a new page will open then click link a second time to save or open for viewing)

2012 Report to the Commissioner of Internal Revenue
2011 Report to the Commissioner of Internal Revenue
You’ve got to read this article by: By Aliya Sternstein 04/19/2012 (well you don’t have to, but its very informative)

There’s your tax dollars working for you!


Do you know where you tax return is?
If you’re like hundreds of thousands of others who have already filed their tax returns promptly and have discovered that some crook has already filed one for you, then you’re probably pretty upset and have good reason to be.

If you’re just sending out your tax return today, then you have a very good chance of becoming a victim yourself.

How will you know if you are a victim?

If you file electronically you will most likely receive a message from the electronic filing system that a duplicate social security number has been detected or that a tax return has already been filed using your social security number.

If you file by mail, it may be weeks or even months before you even find out you’re a victim. You will receive a letter that says, “more than one tax return was filed for you” or states “you received wages from an employer you don’t know”. And then it will be more months or even, in some cases, a year or two before you will actually get your tax return.

What should you do if you become a victim?

If you file electronically:

Unfortunately you will need to call the IRS to determine whether or not this message is indeed due to identity theft.
Be prepared to hold and be on the phone for at least an hour (don’t do this on your lunch break)
They will tell you to file a police report. However there has been so much identity theft and tax return fraud this year that most police departments will not even take a report.
If your local police department will not take a report don’t worry about it – it probably wouldn’t make much of a difference anyway.
Read this article “Tax Refund Stolen” on what to do (scroll halfway down the page and start with line item number 7)
After following these directions, be prepared for a very, very long wait. From what I understand, you will eventually get your tax return and in some cases with interest tacked onto it. The problem is when? And that “when” is averaging somewhere around at least six months to two years.

Last night I did an interview with Scott Cohn of CNBC’s “Squawk Box” on tax return fraud and identity theft and he brought up some very important issues that I really hadn’t had a chance to think about regarding identity theft – those things being the long-term effects or aftermath of identity theft and how it might continue to affect its victims.

When Scott asked me this question it made me think of things like, what will happen if because of this tax return fraud/identity theft:

Your income is reported wrong and you temporarily lose certain medical benefits because of a sliding scale medical insurance program
Your work record is tainted by reports of incorrect employers, which subsequently become part of some public record system and this causes you not to get a job because an employer thinks you have submitted false information
You apply for financial aid and are deemed ineligible due to incorrect income reports
Your child support is adjusted due to incorrect income reports
The list could go on-and-on.

As I mentioned in my interview, the IRS is similar to credit bureaus in that it’s really easy for negative or erroneous information to appear and stay on your report but you’re going to play HELL trying to get anything removed or eradicated.