By David M Kendrick CPA, MST

The Treasury Inspector General for Tax Administration (TIGTA) recently released their report regarding the audit of the IRS and how they handle identity theft issues that result in fraudulent refunds. The result? There is a need for improvement!

Why the audit?
The audit was initiated because, as of December 31, 2011, there were 641,052 occurrences of identity theft (per the IRS’s Incident Tracking Report).  This, coupled with taxpayers testifying before Congress that they received what essentially amounted to unsatisfactory customer service, triggered the audit.  Among the chief complaints – taxpayers having to deal with multiple IRS employees, having to establish their identity repeatedly, and receiving IRS guidance that was often limited and conflicting.

Generally, identity theft victims are unable to e-file their own returns since their SSNs are in use by thieves.  In this case, the IRS instructs victims to “paper file” their returns and attach Form 14039, Identity Theft Affidavit.  This, however, delays processing because adequate procedures to handle these special cases in a timely fashion are not in place.  Also, the TIGTA found that these cases were not worked timely, sometimes taking longer than a year to resolve!


The IRS suggests the following to fight Identity theft:

• Don’t carry your Social Security card or any document(s) with your SSN on it.
• Don’t give a business your SSN just because they ask. Give it only when required.
• Protect your financial information.
• Check your credit report every 12 months.
• Secure personal information in your home.
• Protect your personal computers by using firewalls and anti-spam/virus software, updating security patches, and changing passwords for Internet accounts.
• Don’t give personal information over the phone, through the mail or on the Internet unless you have initiated the contact or you are sure you know who you are dealing with.

Rest assured, we go through great lengths to keep your identity safe!  When requesting or sending confidential information, we prefer to use our secure web portal.  You can sign up by visiting our website tab labeled “Login”, click on Client Portal, and walk through the steps in “register here.” This is just one of the many steps we take to protect your identity.