The IRS Refuses to Tell Fraud Victims What Identity Thieves Stole

© Andrew Harrer/Bloomberg/Getty Images The Internal Revenue Service (IRS) headquarters strands in Washington, D.C., U.S., on Wednesday, April 9, 2014.
© Andrew Harrer/Bloomberg/Getty Images The Internal Revenue Service (IRS) headquarters strands in Washington, D.C., U.S., on Wednesday, April 9, 2014.

Tim Loo learned early this year that his name and Social Security number had made their way onto a fraudulent tax return, and immediately wondered whether the identity thief might also have his bank-account details or his kids’ Social Security numbers.

To survey the extent of the damage, Loo asked the Internal Revenue Service for a copy of the bogus return. It refused. TurboTax, whose tax-filing software the criminals had used, told him they couldn’t share the fake return with him either, for “privacy reasons.”

The Boston-based physician wondered: Whose privacy?

Loo is among the ranks of U.S. taxpayers — several million and rising sharply — who have had returns falsely filed in their name in recent years. New consumer-protection rules were supposed to make it easier for people like him to figure out what thieves have stolen. But there’s a catch: Other IRS rules encourage its workers to keep a tight grip on the bum returns. Employees face the specter of felony charges for giving out private details — including, possibly, those of the identity thieves — to those who aren’t authorized.

“It’s a shocker finding out that information can be stolen,” Loo said. “But the real frustration is with trying to get the information that you need to manage the situation.”

Neither the IRS nor Intuit Inc., the maker of TurboTax, track how many people have sought the returns wrongly filed in their names, much less how many of those have been turned down.

Millions of Returns

But the potential pool is big. About 2.4 million U.S. taxpayers’ names or Social Security numbers appeared in falsified returns in 2013, the most recent year available, according to a March report from the Treasury’s Inspector General for Tax Administration. That’s a nearly tenfold increase from 2010, according to the inspector general’s study.

That steep rise came even before the wave of fraudulent returns that prompted TurboTax, one of the largest tax- preparation firms in the world to suspend filing state forms for customers in February.

In 2013, the IRS estimates it paid out about $5.8 billion on returns it later determined were fraudulent, and prevented more than four times that amount.

The IRS is careful not to release documents that could inadvertently include others’ private information, it said in a statement. The agency also works — with victims’ consent — with law enforcement agencies, which requested copies of nearly 7,000 returns last year, according to the e-mailed statement.

Fraud victims can get a copy of the return from TurboTax after submitting a written request and verifying their identity, said Julie Miller, a spokeswoman for Intuit. Of Loo’s situation, Miller said by e-mail: “He may have connected with an agent(s) who was not familiar with our policy.

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Source: Bloomberg | Keri Geiger and Margaret Collins

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