Category Archives: Tax Fraud

IRS Names ‘Dirty Dozen’ Tax Scams for 2012

Every year IRS publishes its list of the most obnoxious tax scams for the year – taking the name from a famous movie of decades ago:  “The Dirty Dozen.”

It’s always amusing to review the list, while at the same time recognizing that there are real crooks out there, trying to steal not only from unsuspecting taxpayers, but also from Uncle Sam himself.

“Taxpayers should be careful and avoid falling into a trap with the Dirty Dozen,” says IRS Commissioner Doug Shulman.  “Scam artists will tempt people in-person, on-line and by e-mail with misleading promises about lost refunds and free money.  Don’t be fooled by these scams.”

Number one on this year’s list is identity theft, generally first brought to the attention of the target taxpayer who receives a notice from IRS that more than one return was filed in that taxpayer’s name or that the taxpayer received wages from an unknown employer.  Folks who suspect for one reason or another, that their personal identity has been stolen and used for tax purposes should contact IRS – check out www.IRS.gov/identitytheft for the procedures.

And if you are interested in the rest of the “Dirty Dozen,” get hold of IRS News Release 2012-23, issued just last week.

Post authored by Jeffrey A. Quinn

Identity Theft in the Tax Realm is on the Rise

In recent testimony before the Senate Finance Committee’s Subcommittee on Fiscal Responsibility and Economic Growth, Nina Olson, the National Taxpayer Advocate, issued a solemn warning to taxpayers:  IRS is seeing unprecedented levels of identity theft leading to tax fraud.

In general, identity theft occurs in tax administration, said Olson, when an individual intentionally uses the Social Security Number of another (mainly in connection with a fake filing to obtain a refund) or to gain employment under false pretenses.

The IRS has created the Identity Protection Specialized Unit (IPSU) to help identity theft victims, but can barely keep up.  In fiscal year 2009, identity theft cases totaled just over 80,000; in fiscal 2010 the number was over 188,000, and in roughly just the first seven months of fiscal 2011, the count is nearly 127,000 cases!

Searching for an explanation for all of this, Advocate Olson offers several likely explanations for the dramatic increases:

  1. The increase of such cases in the IRS could simply reflect an overall increase in tax-related identity theft as opposed to other kinds of identity theft.
  2. There is increased public awareness of identity theft.  Folks may be checking their credit reports more frequently and may be more adept in detecting identify theft.
  3. Identity thieves have become more proficient.  One of the more sinister schemes involves the misuse of a deceased taxpayer’s Social Security Number to obtain fraudulent refunds.
  4. Personal information has become readily accessible.  Apparently, the Social Security Administration is required to make available certain information about deceased individuals, including their name and Social Security Number.  The Advocate notes that Internet searches can lead to a number of sites which provide this information, often free of charge.

Bottom line – taxpayers beware!

(For tips on how to protect yourself, see Nolo’s article Identity Theft During Tax Time: Protecting Yourself.)