Tips to Avoid ID Theft and Tax Fraud

Identity theft and tax fraud victims – like Michael Bucalo whom I recently met in Cleveland – know that “there are people out there [who] are so slick; they can steal your shoes while you are running.” For criminals who prey on unsuspecting taxpayers, tax season is the time to cash in – on other people’s hard-earned refund checks.

With more than two million suspected fraudulent tax returns currently under review by the Internal Revenue Service (IRS), criminals who steal identities to illegally obtain tax returns are creating a national epidemic. According to the Federal Bureau of Investigation (FBI), a Chardon couple was charged with filing at least 35 false income tax returns, resulting in a total of at least $155,000 in false IRS claims. Reports also show that Americans make about 50,000 identity theft claims to the Federal Trade Commission every week – mostly regarding tax refund theft.

Here’s how it happens: criminals steal taxpayers’ Social Security numbers and file false tax returns early to steal refunds. Many Americans may not even realize that their personal information has been compromised until they file their returns later during the tax season and discover their return has already been claimed. Identity theft and fraudulent tax refunds cost Ohioans time and money.

Hardworking Ohioans have to spend time navigating paper trails and re-establishing their identities – while missing out on the tax refunds they’ve earned. According to the Taxpayer Advocate’s Office, the average tax refund in 2011 was about $2,913. This is money that hard-working Ohioans cannot afford to have taken from them by fraudsters. And our government cannot afford to hand out billions in illegal tax returns each year.

That’s why I’m fighting to pass the Identity Theft and Tax Fraud Prevention Act, which would protect Americans in three, simple ways.

First, it would increase penalties for people convicted of committing identity theft and cashing fraudulent return checks. We can stop and deter the networks of criminals who steal, trade, and cash-in on other people’s identities, by imposing tougher penalties. This bill would also increase the civil and criminal penalties for improper disclosure or use of taxpayer information by tax return preparers.

Next, and perhaps most importantly, this bill would expedite tax returns for Ohioans whose identities have been stolen.  Innocent Ohioans should not be doubly punished – having their identity stolen and their tax return delayed. Instead, this bill would give all identity theft victims a unique personal identification number to include on their tax return to further prevent fraud and avoid tax refund delays. Honest citizens should not have to wait months and months to get the money they’ve earned. Ohioans making less than the average gross income of $32,393 simply cannot afford to go without a refund – or wait longer than usual to receive a refund because a crime has been committed against them.

Finally, this legislation would require the IRS, Bureau of Prisons, and the Treasury Department to step up identity theft tax fraud prevention programs. We can do a better job of informing citizens how to keep their information safe. The IRS can do its part to protect taxpayer information by providing an annual report on the number of reported tax fraud cases and the actions taken in responses to these reports. The IRS and Bureau of Prisons can work together to reduce prison tax fraud. And the Secretary of the Treasury should have the authority to implement an identity theft tax fraud prevention program to empower citizens.

If this law had been in place when Michael realized he couldn’t access his tax refund, then he may not have had to mail the IRS a copy of his Social Security card, driver’s license, passport, utility bill, and a copy of the police incident report – just to get the refund he deserved.

Until we pass this legislation, Ohio taxpayers can help prevent fraud by taking a few extra steps:

1)      Don’t carry your Social Security card or any document with your Social Security number;

2)      Avoid sharing your Social Security number and other personal information – especially over the telephone, Internet, or mail; and

3)      Check your credit report each year.

Ohioans who suspect identity theft can contact local law enforcement officials or the IRS Identity Projection Specialized Unit at 1-800-908-4490.

With this legislation, we can protect taxpayers’ privacy and keep citizens safe. Ohio taxpayers, like Michael, deserve a government that fights to make sure citizens don’t fall prey to identity theft and tax fraud.