The IRS Dirty Dozen 2015, #3: Identity Theft

If you are not constantly guarding yourself against identity theft, you should be. The hassle of reporting fraudulent credit card charges, replacing your card, getting locked out of a stolen email account, or dealing with the embarrassment of a hacked social media account is nothing compared, for example, to the inability to obtain a mortgage because a thief has used your social security number to defraud someone who in turn placed a lien on your home. 

A favorite pastime of identity thieves is getting quick cash by using your social security number to file a fraudulent tax return in your name, and then collecting the tax refund they said the IRS owes you. This has become an enormous problem-The Wall Street Journal recently reported that in 2013 the IRS lost an estimated $5.8 billion in fraudulent refunds.  

What the IRS is doing to identify fraudulent returns

A March 19, 2015 meeting between the IRS, state tax administrators, leading tax-preparation firms and payroll and tax refund processors focused on how best to combat the increasing surge of tax-refund fraud.  Here are some current and proposed measures:

Improved identity theft data models and filters – For the 2015 tax year, the IRS will be increasing the number of identity theft data models and pre-refund filters to improve their efficiency in identifying potentially fraudulent returns

Increased criminal investigations – In 2014, IRS criminal investigations nearly doubled, and sentencings increased by 75%. Incarceration rates have also increased significantly.

The IP PIN Pilot Program – The IRS has initiated an identity theft protection program in which taxpayers are assigned a unique, six-digit Identity Protection PIN (IP PIN) to use when filing their federal tax returns. The program is currently being offered in a limited number of states as a pilot program for taxpayers who have been victims of identity theft in the past.   

Other considerations – Other ideas discussed at the March 19th meeting included delaying refunds to give the IRS more time to identify fraud; speeding up W-2 reporting; and new security measures on pre-paid debit cards used to issue tax refunds. Working groups have also been established to explore ways of combatting fraud through taxpayer authentication; developing a greater understanding of fraud schemes; and information sharing between the IRS, state agencies and tax preparation firms.

How to protect yourself from tax-related identity theft

We urge taxpayers not to rely on the efforts of the IRS to solve this problem-you need to be vigilant in protecting your personal and financial information. Here are a few ways that you can protect yourself from tax-related identity theft:

  • Never carry any card or document that includes your social security number or business tax identification number
  • Use firewalls and antivirus software on your computer.
  • Create strong internet account passwords and use a different password for each of your internet accounts. Change all of your passwords frequently.
  • Don’t give out your personal and financial information in person or on the internet unless you know who you are dealing with and YOU initiated the contact.
  • Check your credit reports and social security earnings statement every year.


The attorneys at Moskowitz LLP are dedicated to helping individuals and corporations from throughout the U.S. and abroad with the full range of civil and criminal tax matters. Contact our office today for a consultation.


#4 on the IRS “Dirty Dozen” list of tax scams is Return Preparer Fraud, which we will cover in our next blog post in this series.