Why the IRS can’t tell you what your identity thief took

May 12, 2015 by Carolyn Richardson, EA, MBA
Tax scammer

Unless you’ve been living under a rock for the last two years, you are probably aware of the fact that the IRS and the state tax divisions have been faced with an onslaught of fraudulent tax returns filed by identity thieves. These thieves use a legitimate taxpayer’s name, address and social security number to file a fraudulent return claiming a large refund, and then divert that refund to their own accounts. Many of our members have been the victims of this type of theft, and the numbers keep growing. The IRS estimates they received over 2.4 million fraudulent returns for the 2013 filing year.

If you’ve been the victim of this type of identity theft, you’re probably curious about what was on that fraudulent return. How much refund did they get? How close were they in guessing your income? What other information was on there that might have been compromised? And one of the first things you may do is call the IRS to get a copy of the return, in which case the IRS will say “No.” The same will happen if you contact your software provider to get a copy of the return, as they will also tell you they cannot send you a copy of the fraudulent return. You may think this is crazy, but it’s actually the law.

While consumer protection laws are supposed to make it easier for an innocent taxpayer to figure out what the thieves have stolen, those laws do not apply to the IRS. In fact, IRS employees can be seriously penalized for releasing information regarding a return – fraudulent or not – to an unauthorized individual. That means you. Section 6103 of the Internal Revenue Code prohibits the IRS from sharing return information with any unauthorized individual. Not only is this section designed to keep IRS employees from doing such things as looking up celebrity’s returns, but because the fraudulent return may contain information considered “private” to the identity thief, such as a bank account routing and account number, it also prevents the IRS from sharing the fraudulent return with you. Ironically, this section was added to the Code in the wake of revelations that President Richard Nixon had sought IRS audits of his political opponents, which means that the IRS also cannot share specific return information with members of Congress.

Fortunately, there are some options. The IRS will provide a copy of the fraudulent return when it is requested by law enforcement, provided you give your consent to them to retrieve it. So it is worthwhile filing a police report of the theft, even if you don’t think it will go anywhere. You at least will have a local police office to contact and push to request the return. Apparently, many police are unaware they can do this as the IRS received only 7,000 requests for return copies last year.

Your tax software provider will also provide a copy of the fraudulent return by submitting a written request and verifying their identity.

And as always, TaxAudit.com is here to help. If you believe or know you have been the victim of return-related identity theft, contact us immediately. Our audit representatives will respond to any IRS or state notices you may receive for a covered year related to the identity theft, which may include collection notices or “erroneous refund” notices, and help you get your account corrected with the tax agency. Since it can take up to a year to resolve these problems with the IRS, do you really want to try to handle it on your own?

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Carolyn Richardson, EA, MBA
Learning Content Managing Editor

 

Carolyn has been in the tax field since 1984, when she went to work at the IRS as a Revenue Agent. Carolyn taught many classes at the IRS on both tax law changes and new hire training. In 1990, she left the IRS for a position at CCH, where she was a developer on both the service bureau software and on the Prosystevm fx tax preparation software for nearly 17 years. After leaving CCH she worked at several Los Angeles-based CPA firms before starting at TaxAudit as an Audit Representative in 2009. Carolyn became the manager of the Education and Research Department in 2011, developing course materials for the company and overseeing the research requests. Currently, she is the Learning Content Managing Editor. 


 

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This blog does not provide legal, financial, accounting, or tax advice. The content on this blog is “as is” and carries no warranties. TaxAudit does not warrant or guarantee the accuracy, reliability, and completeness of the content of this blog. Content may become out of date as tax laws change. TaxAudit may, but has no obligation to monitor or respond to comments.