This happened to us several years ago. Someone else tried to file under our information. The IRS caught it, now we have several measures to go through to file.

I always file as soon as I get my hands on my forms. I get really annoyed at how long some of them take to get to me given the epidemic of this happening. Sometimes I feel like there are more bad people in the world than good. I have had my identity stolen before and it is such a violation. And it's nearly impossible to get a new SSN.

Tax return theft would stop if over-payments were automatically applied to next years taxes.

Tax return theft would stop if over-payments were automatically applied to next years taxes.

Doesn't work if you get a refund every year.

Sushi over-payments are refunds if you select to have them refunded to you.

Rather than someone hacking your email it was probably someone where you had sent an email to in the past.

As far as the time difference very few emails that I receive show up immediately after someone sends them to me. A few have shown up a day later.

Perhaps a paper check in the mail would help.

raye, I think you're a bit off track. The phony tax return game assumes that the tax shown on the phony return filed is less than payments in, so that a refund results. It has nothing to do with what the real facts are nor whether the real person ultimately is or isn't due a refund.

The IRS catches these mostly because the phony return will use a different address from that used from the prior filing. Yes, people move, but I suspect they use publicly available information to see if they can corroborate the new address with a second source.

People here have had their houses sold without their knowledge or permission using a similar method.

My CPA has set up some kind of secure communication system that includes some complicated security aspect. It's something used for exactly this reason, so clients can only communicate with her regarding taxes using this service. I think I can still email her a question as long as there are no account or tax i.d. or $$ references. I can't recall the name of the service, but apparently is in wide use in the accounting business.

Sush, I've always had my return applied to the next year and sometimes that is multiple years in a row. It wouldn't stop all theft but why would someone try to file false taxes if they know they won't receive any money from doing so?

So you just allow your refunds to amass? Or is it because you pay quarterly estimates? I don't understand.

The crook files a fake return to get a refund sent to the crook's bank account.

We prefer to owe or break even at the end of the year also.

People here have had their houses sold without their knowledge or permission using a similar method.

A clear indicator of this is when they put a sign in the yard that rather than saying "for sale by owner" it says "for sale by stranger" :-)

Even if you would owe money it would seem that some crook could make up fake numbers that would result in a refund and then file that.

I always prefer to have a paper check sent to me (in the rare years when we get a refund) but last year for our state refund, although we filed on time in April, the paper check didn't arrive until December.

Hot Rod/Watch - that's the smartest way, don't give them a free loan!

Sush - my taxes vary way too much too make easy estimates of what they will be. I've been close enough most years to make it a small amount of over-payment (<$100 typically) or a small under-payment (even better).

If all refunds were applied to the next year then there wouldn't be anything to steal. If you have a large refund you would be much wiser to adjust your withholding.

Raye, you and I are in complete agreement. Even the numbers. Around $100.

I'm not sure why but I'll give it a last try to shine light on this question.

The starting point is that a miscreant gets your social security number. They file a phony tax return with your name and SSN. And an address different from yours. It doesn't matter how much tax is in your account for the year, call it $5000 or whatever. The miscreant doesn't know and puts in made up numbers. From withholding, estimated tax payments, credits from prior year overpayment, it's all the same. The phony return shows a minor amount of tax liability and asks for a refund check. It doesn't matter if your actual return is always overpaid, always underpaid, always on the money.

I'm a CPA. I've had phone discussions and correspondence with the IRS group that works on identity theft. I don't remember the actual name of the group but I believe they're located near Austin, TX.

This is accurate information. The comments above are far off the mark about what usually happens in these situations. You're welcome to ignore my words and continue to speculate. Your choice.

PS to Bob and anyone else - if you want to receive your refund quickly, E-File and give them your bank account numbers for refund payment by ACH. When a refund is received late, it can be because the return was misplaced in processing or was held for screening. Digital filing is handled mostly automatically and processing happens much more quickly than paper filings.

"My CPA has set up some kind of secure communication system that includes some complicated security aspect. It's something used for exactly this reason, so clients can only communicate with her regarding taxes using this service. "

olychick, what it sounds like you're describing is software or a website to communicate with and transmit personal information to your return preparer over the internet for preparation of your returrn. It likely uses some kind of encryption to prevent access by interception enroute.

There's plenty of communication that happens over the internet in non-encrypted form, so it isn't clear this is really essential. Clients appreciate the appearance of effort to protect confidentiality. Does it really matter? It's hard to say. For those who are concerned, get in your car and drop off your info in person.

or fax it. Or use a dropbox of some sort. It's possible to send sensitive information in a way that is harder to access.

Elmer, I am just curious. The only income I have is social security, pension and some dividends and interest. I have nothing withheld and usually pay a few hundred when I do my return ( which was done over a month ago). Could someone file a fake return and receive a refund with my name and ssn?

If you have no payments in your account during the year, there's nothing to refund. Someone who has your social security number wouldn't know that so they most certainly could try.

For you Rose and anyone else, a fraudulent payment of a refund to someone else doesn't result in you "losing" anything. These incidents happen with some frequency. Many are identified during processing but some do still slip through the cracks and aren't intercepted in time. Should this happen to you or anyone else, you can be confident that the IRS knows how to fix the problem on a case by case basis and will give you full credit for the payments you've made.

But it's also fair to say that if a bad guy has your social security number, phony filings with the IRS may not be the only risk of misuse you may face.

Someone tried submitting a return with my SSN last year using Single status. What a mess! I wasn't allowed to E-File this year because of the identity fraud.

Yes, that's one of the consequences. And it appears the returns of taxpayers on this list of past third party fraudulent activity get processed more slowly when filed in hard copy. It might be that the name triggers manual inspection or something else. Unfortunately, that may not change for you in the future.

Another inconvenience for some is, for example, TurboTax won't process a California e-filing if the federal return isn't e-filed. That wouldn't affect you in Texas with no state individual tax but I suspect it's TT's practice for state returns. Or perhaps a California only thing, no matter.

rob, if your return is being filed in hard copy and not by e-filing, there are pieces of paper (like your W-2 and a few others) that must be physically attached to the return, so people in that situation can't simply fax info to the preparer.

Many tax preparers don't want to deal with a shoebox of loose papers these days - it takes too much time - so they ask their clients to prepare questionnaires on which they answer questions and fill in data lines to organize their income and deduction info. Source documents may be requested too but they're only referred to if there are questions and they aren't retained. For simple returns, a w-2 and a random statement here and there, different matter.

so glad I do it all electronically.

My comments were intended for a broader audience than just you because your "fax it" comment isn't advice most people can follow.

And mine was, I had no idea, since I don't file in person?

Elmer - If there's no returning of money there's little reason to steal. Thieves want a check mailed or direct deposited to them, no refunds - no temptation.

Here's another way this whole problem could be solved. Stop payroll deductions and estimated taxes, then have all filers pay after the tax is calculated. Then there would be no over-payments except in the occasion that an error is made in calculating the tax due. Another benefit is that money that will go to taxes could be used to earn interest.

I think you misunderstood rob. I was talking about providing information to return preparers. That's what olychick's comment was about and I was responding to that.

Few file in person, the majority choices are e-file or mail. I guess you could drop it off at an IRS office but why bother?

raye, you missunderstood again too.

For 2018, you paid in tax by withholding or estimate tax payments of $4000 between Jan 1 and December 31. I have your name and Social Security Number. On January 20, I file a return with your data showing tax due of $1000 and so a refund to be paid of the excess of your actual tax payments over this small amount of tax. Sometimes the phoniness is discovered because the bad guy doesn't show the right amount of taxes paid in but since this ruse works, it on occasion goes undetected until much later on and after a refund check has been sent.

There are a number of reasons for having withholding and estimated payments. The most important one is that the governments need the cash to pay for their own operations and can't wait for it at a later date. Another is, people aren't good about saving for later large bills due and the effort needed to collect unpaid taxes would be horrendous.

And the reason why it will never be changed - suddenly ending withholding and estimated payments would cause governments to suffer a one time 12 month delay in collecting cash. None can afford to do that, it's that simple.

Here's something most people don't know - when the federal government releases actual data on the budget deficit, it's done on a cash basis. There have been several times in the past few decades where changes were made to accelerate individual and corporate estimated tax payment requirements, to require more be paid in sooner. WHY? Because it reduces the publicly disclosed "budget deficit". Yes, accelerating payments in has no effect on the total ultimately received, and getting more now means less later. But it isn't tracked that way.

Elmer, in your example: if a refund is not paid but all refunds for all filers are applied to the next years taxes you get nothing.

Taxes are the only item we pay before knowing the cost, that's backwards.

People pay for vehicles, medical/vehicle/homeowners/umbrella insurance, down payments, mortgage payments, college tuition, medical bills, etc... so no, I disagree that people can't pay large bills, most do so multiple times a year.

As for the government, doesn't it need to be on a massive diet anyway?

Moderators-Please take this post down. It was meant to be a warning to others to be very, very careful as there are people out there trying their best to take what is not theirs. As usual, some people have felt the need to turn this post into something entirely different than the intent.

You're welcome to your views, I'm not sure you'll find many who agree with you though.

Write your federal and state elected representatives to share your suggestions. Don't expect to receive a positive reaction, the reality of government spending and cash flow to fund same are factual. If it were possible to cut government spending in half, they'd all still need to receive monthly or quarterly tax payments, so the amount of spending really isn't connected. .

ldstarr, yes, it's terrible that taxes have become a target for thieves and it is a concern for all taxpayers. The current system doesn't provide protection as has been seen with this growing issue.

Since we can't change their behavior of those that do this, there should be wiser ways of handling taxes reducing opportunities for theft. I've just suggested a few ideas to make it significantly harder for the thieves since their target is to steal refund checks or deposits. Unfortunately until those that have the misfortune to have been through are heard and those that control the tax process listen nothing will happen.

A somewhat similar situation was when people complained about having checks/paychecks stolen from the mail, . Now these transactions take place electronically greatly reducing the opportunity for theft.

I don't understand why anyone is getting upset. Elmer is commenting on something he really does know about this time and has taken the time to try to explain it without pontificating. Don't kill the messenger.

Haha, this time?

Yep. :-D

Regarding paper filing and attachments - you most certainly can email or fax a W-2 to your preparer. The IRS is fine with a copy of it attached to your return.

I appreciate Elmer's step by step illustration of how this 'works' for the thief who has nothing but a name and SSN -- and the assumption that you pay taxes.

Might thieves be caught by monitoring where the payment is requested to be sent? Can the destination for an electronic transfer be sussed out in advance of sending anything? Can such monies be 'marked' -- be traceable when spent -- or made to 'infect' everything else in that account? (An electronic 'red dye'?)

I suspect that most of these scams are run from outside of the US making tracking attempts and prosecution impossible unfortunately.

I've only had a few encounters with the IRS about such problems. They tend to speak more openly and broadly with CPAs than with taxpayers.

The IRS's main concern is to identify and intercept false filings. They consider themselves a secondary victim of identity theft (with the individual concerned as of course the primary victim), because it disrupts their mission to administer the tax law fairly and give reasonable service to taxpayers. I'm not sure which federal agency, the IRS or another, has the job to try to track down the wrong-doers.

The IRS as an agency is chronically underfunded and about this I am very sympathetic. They have their shoe laces tied together while trying to do the best job possible and it suffers because of lack of funding in the federal budget. One of the areas with the most bandaids and patches is its IT infrastructure, a key tool for identifying false filings. It's really dumb and shortsighted, because it's been well demonstrated that each additional dollar given to the IRS for key programs produces many dollars of additional collections for the federal treasury. No other agency can demonstrate so easily such a multiple in its bang for the buck.

My understanding is that they're domestic, not foreign, fraudsters because they need to be around to collect mailed refund checks. They often use mail service locations for that. A bank transfer would be traceable through bank records. It's easy to anonymously cash a check at a lower level "financial" institution where no account opening is needed. A payday loan business would be an example.

I won't suggest that my understanding of this is complete and comprehensive. As above, my encounters have been limited but these comments are the upshot of what I learned about this problem. Of course, any expert in this particular area is invited to shed more light or correct any mistakes of understanding I have.

One of the things I did wonder at in the OP was the mention of depositing to a bank account. Most scammers as Elmer has pointed out request a check to be sent. Having a deposit from the IRS to a bank account is a red flag to me that the person could be a family member or close "friend". Most will not prosecute a family member if it would mean major jail time or fines. Not certain since this is a crime against a federal agency along with banking fraud how much "forgiveness" a family can do in a similar situation. There are other possibilities of course.

Because the party injured by the fraud is the federal government, not the individual concerned. I believe it is the government that makes prosecution decisions. This is not something like domestic violence where charges need to be confirmed or not by the victim.

Yes but probably most that try this are not smart enough to know that, Elmer.

I'm not sure how what you're saying applies. Are you suggesting someone would try to fraudulently claim a refund of a family member, thinking that no prosecution would result? I doubt circumstances like this represent much other than noise level in the world of fraudulent returns.

Do you think people who commit other frauds and thefts are smart? I don't.

Elmer I have seen several thefts by family members. Many are dumb enough to think that this is only stealing from a family member and not from the government.

One thing I do that I believe is helpful is file as soon as possible. My tax return is not complex, and some of the info I need is available on various sites even before they send the information to me. So often I file the first week of February.

"Elmer I have seen several thefts by family members."

Thefts of federal tax refunds through a fraudulent tax return filing? That's the topic.