Taxpayers regularly scammed by identity thieves

Why Your Tax Return Isn't Safe 

Identity thieves steal refunds, costing taxpayers billions. The IRS should do more to help prosecutors fight the epidemic.

By CYRUS R. VANCE JR., WSJ 

The millions of Americans who are rushing this weekend to file their tax returns to the Internal Revenue Service will be relieved to have beaten the April 15 deadline on Monday. But thousands of them, along with thousands of other taxpayers who have already filed, will be stunned when they learn in the coming weeks and months that their returns have been rejected.

Why would the IRS reject them? Because these taxpayers will turn out to have been the victims of identity-theft tax fraud. The increasingly common scam costs taxpayers $5 billion a year.

Here's how this type of identity theft works: The scammer steals an individual's name and Social Security number and uses that information to file a phony tax return. Soon after, he receives a refund from the IRS, which has little reason to question, at least initially, an authentic-looking return. When the actual taxpayer files a return claiming a refund, the return is rejected.

With the increasing popularity of e-filing returns online, the theft has been made easier than ever. According to the IRS, identity-theft tax cases have jumped 650% since 2008, with the IRS working on nearly 650,000 identity theft cases during 2012.

(More here.)