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Old 05-02-2014, 11:23 AM   #21
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I don't see how this would end the problem. The scammers file false returns showing a big refund. So your los might be less, but it wold still happen.

For retired people a surefire way should be to make no estimated payments or carryovers, and just pay the penalties at filing time.

Ha
I guess it depends on how much info they falsified? Maybe they claim to have had some large $ withheld?

When I've got a refund, it seemed to come shortly after I filed - I really don't think they had time to double check anything, even the straightforward electronic checking.

Twice in my life I've had a 'paper audit' (I think that is what they are called) - just a request for info, and a bill for the difference if I didn't supply the info. One time was clearly my fault, I stupidly forgot to include my Sched A paper copy, so they just denied all my deductions. But I got the refund (or maybe I was due that year, can't recall), the checking didn't occur for many months afterward. I submitted the paperwork, and that was the end of it.

The other time was some kind of glitch in the e-file, or possibly operator error on my part (can't imagine where, I kept pdfs of everything). They had a zero where I clearly had an entry on my pdf copies. But again, it was many months before they noted this. I just gave them the number I wanted to be there (had to fax it, ughhhh!), they accepted it, and all was OK.

So I'm guessing you could enter just about anything, maybe even list estimated payments or a withholding that doesn't match the W2, and they would not catch it until much later.

Filing early and amending might help - but will the crooks just start running fake amendments?

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Old 05-02-2014, 11:52 AM   #22
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I don't see how this would end the problem. The scammers file false returns showing a big refund. So your los might be less, but it wold still happen.

For retired people a surefire way should be to make no estimated payments or carryovers, and just pay the penalties at filing time.

Ha
It probably doesn't end the problem as long as the IRS absorbs any fraud losses.

But your approach probably doesn't solve it either. In both cases the fraudster has no idea what has been withheld/estimated payments and just makes a number up, knowing that the IRS doesn't check them before issuing refunds. One simple thing the IRS could to is to validate the total withholdings and/or estimated payments before issuing a refund check since a fraudster would not likely have this information.

If the fraudster has name, TIN and an address they can file a fraudulent return I suppose.

The best way to avoid the problem would be to file early.
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Old 05-02-2014, 12:10 PM   #23
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Even if the IRS absorbs the loss and the taxpayer is made whole, the problem remains that these bad guys have accumulated enough data on their victim to do a lot of damage in other areas. A credit freeze is called for ASAP to prevent further damage.
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Old 05-02-2014, 12:52 PM   #24
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Before reading the news articles this year on this fraud I had always assumed that when you filed a return that the IRS computers would cross-check your return with your W-2's, 1099's, est tax payments etc. At the very least it seems very easy for the IRS computers to have taxes paid throughout the tax year registered to your SS or TIN so that at a very minimum if your return states a different amount of taxes paid that should raise a big red flag.

Obviously more complicated than I thought.
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Old 05-02-2014, 03:30 PM   #25
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Filing early and amending might help - but will the crooks just start running fake amendments?

-ERD50
I think this would be assuming too much capability on the part of the crooks.

I wonder why the IRS cannot detect a lot of this fraud. First they would only check on returns that had money coming back. Second they would check against some sort of fingerprint of the last year's return like income sources, deductions, etc . Most people have a fair amount of similarity in their returns year to year.
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Old 05-02-2014, 03:47 PM   #26
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I think this would be assuming too much capability on the part of the crooks.

I wonder why the IRS cannot detect a lot of this fraud. First they would only check on returns that had money coming back. Second they would check against some sort of fingerprint of the last year's return like income sources, deductions, etc . Most people have a fair amount of similarity in their returns year to year.
E-filing with Turbo Tax required us to enter the AGI from last year's return. That seemed pretty reasonable.
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Old 05-02-2014, 03:57 PM   #27
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E-filing with Turbo Tax required us to enter the AGI from last year's return. That seemed pretty reasonable.
That is what we did too.
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Old 05-02-2014, 04:04 PM   #28
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I don't think you are "required" to enter last year's AGI as there are alternative processes available (I don't remember specifically what since I just entered last year's AGI).

But perhaps if you file electronically you should be required to enter 2 or 3 key numbers from the prior year return to keep the fraudsters at bay.
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Old 05-02-2014, 04:53 PM   #29
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I don't think you are "required" to enter last year's AGI as there are alternative processes available (I don't remember specifically what since I just entered last year's AGI).

But perhaps if you file electronically you should be required to enter 2 or 3 key numbers from the prior year return to keep the fraudsters at bay.
We have an IRS e-file PIN that is an alternative to entering last year's AGI. This is what I don't understand about how the fraudsters get away with stuff like this.

The IRS sounds as bad as Amazon.com who allowed someone to set up an Amazon account in her name (probably fake, but NOT my name) and register my CC details with the account and start buying stuff. I didn't even get an email to warn me that my CC was registered on an account that was not mine. First I knew something was wrong were charges to my CC.

The fraud guy at Amazon said it was normal practice for this to happen so maybe the IRS think that it is normal for tax returns to not have validating information to confirm it is coming from the correct person.
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Old 05-02-2014, 05:01 PM   #30
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Before reading the news articles this year on this fraud I had always assumed that when you filed a return that the IRS computers would cross-check your return with your W-2's, 1099's, est tax payments etc. At the very least it seems very easy for the IRS computers to have taxes paid throughout the tax year registered to your SS or TIN so that at a very minimum if your return states a different amount of taxes paid that should raise a big red flag.

Obviously more complicated than I thought.
Consider that electronic w-2s are not due till march 31, so they if that was the case they could not start refunds until April, Likewise for 1099 s their deadline is March 31. This is why you get them 45 days earlier to allow corrections until filed. So if we really want to fight fraud, we would need to not start refunds until April.
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Old 05-02-2014, 05:04 PM   #31
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Reducing fraud while minimizing delays and turnaround is hard. It's not just the IRS, even the businesses often named as "getting it right" often don't.

When I helped an extended family member deal with electronic theft of a large sum from his bank account, it took a year to get the bank to admit, acknowledge and agree to reimburse. They promptly sent the reimbursement to the false address that was originally used to steal the funds. It took another 4 months to straighten that out.
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Old 05-02-2014, 05:10 PM   #32
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Consider that electronic w-2s are not due till march 31, so they if that was the case they could not start refunds until April, Likewise for 1099 s their deadline is March 31. This is why you get them 45 days earlier to allow corrections until filed. So if we really want to fight fraud, we would need to not start refunds until April.
Good to know, but throughout the year the company I work for or get a pension from is sending tax with-holdings to the IRS and I report that when entering my W-2 and pension 1099-R. I also make quarterly estimated payments so that should also be an easy check since I have to report on my tax return how much has already been sent to the IRS.

Also, when I e-file I still have to provide either my IRS PIN or last year's AGI as proof of who I am. How do the fraudsters manage to get around this?
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Old 05-02-2014, 05:16 PM   #33
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Also, when I e-file I still have to provide either my IRS PIN or last year's AGI as proof of who I am. How do the fraudsters manage to get around this?
Could be they just mail in paper returns by the wheelbarrow load.
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Old 05-02-2014, 05:25 PM   #34
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Even if the IRS absorbs the loss and the taxpayer is made whole, the problem remains that these bad guys have accumulated enough data on their victim to do a lot of damage in other areas. A credit freeze is called for ASAP to prevent further damage.
Not necessarily. That would be a *BIG* undertaking. In my case, I've monitored my banking and credit and nothing else has occurred in four years. Monitor things closely, but there's no need to lock everything down, necessarily. It's not full identity theft, it's a very narrowly applied fraud.
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Old 05-02-2014, 08:59 PM   #35
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In my case apparently it did raise some red flags because they put it on hold.

I am more concerned that my SSN, name, etc is floating out there amongst the dirtbags of the world.
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Old 05-03-2014, 05:49 AM   #36
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In my case apparently it did raise some red flags because they put it on hold.

I am more concerned that my SSN, name, etc is floating out there amongst the dirtbags of the world.
Have you contacted the credit rating agencies to inform them of your identity theft and requested your account be locked in all three?
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Old 05-05-2014, 01:44 PM   #37
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Yes, I put alerts on my credit reports and locked the transunion report. Didn't see how to lock the other two.
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Old 05-05-2014, 01:48 PM   #38
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Krebs had this interesting article recently that talks about how people are targeted for tax return fraud by organized crime. Doctors, in particular, have been targeted. These are coming from theft of payroll information.

Tax Fraud Gang Targeted Healthcare Firms €” Krebs on Security
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Old 05-05-2014, 02:02 PM   #39
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This thread is very timely for me! I read thru it this past Friday, and then, the very next day, I received a 5071c letter in the mail from the IRS regarding the 2013 return I filed on behalf of my FIL who passed away in late 2013 (I'm the executor of his estate). The IRS required identity verification before they could process my deceased FIL's return, no doubt because his return showed a refund is due.

I had the option of going online or calling them; I only got thru the first screen of the online process before a notice popped up telling me I had to call them, no surprise there.

I was on hold for only about 10 minutes -- funny how, after calling insurance cos and Covered CA about ACA matters, I consider a 10 minute wait in the queue to be "short" -- and the IRS agent asked me some questions regarding FIL's 2012 return (AGI, etc), his previous addresses, that sort of thing. I had all the information I needed on hand and it went pretty smoothly.

I'm glad I saw this thread before I received that letter in the mail, it was good to know the rationale behind it. And, it's good to know the IRS is trying to get a handle on the fraud issue.
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Old 05-05-2014, 02:17 PM   #40
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I run an IRS VITA site here in Chattanooga and this year we have seen an increase in ID theft. Out of the 1600+ returns we did I would venture to guess we had at least 20-30 cases of ID theft/fraud. A real PIA to fix as the legitimate person has their return rejected and they have to get an ID theft PIN from the IRS in order to re-e-file their return. In some cases they have to go to the local IRS with supporting ID documentation and have their return mailed in, and I have no idea how long it takes to get their refunds. I would also venture to guess many of the fraudulent claims involve Schedule Cs and EITC claims, hence no need for W2s or 1099s. Our tax code is a cornucopia for potential abuse.
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