By Jennifer Anderson

The IRS is aggressively pushing taxpayers to file returns electronically to reduce processing costs for the Treasury and accelerate IRS tax compliance efforts. These efforts have shifted the cost of tax compliance onto the backs of taxpayers and preparer’s.  E-filed returns require detailed tax information and use more complex filing systems that may result in additional processing fees.  Tax preparers are now required to pay the IRS for the privilege of filing tax returns. It’s clear how this make sense for the IRS but many taxpayers are less enthusiastic. 

Now, to add insult to injury, the Treasury Inspector General for Tax Administration reported that in 2011 there were 1.1 million tax theft cases compared to 2008 that only saw 51,700 cases--- yet the IRS still encourages the use of electronic filing!  While the IRS is not directly assisting the crooks, they are significantly increasing the risk of identity theft by requiring e-filing.

What steps can you take to protect against E-file tax fraud? 
• If you have not initiated the contact or are unsure who exactly you are dealing with, do not give personal information through mail, on the internet, or over the phone.
• If you suspect that a communication from the IRS may be a scam, forward it to the IRS at phishing@irs.gov.
• Keep your Social Security card and other documents with your SSN in a safe place and not with you.
• Only give your SSN to a business when you are required by law.
• Protect personal computers with anti-virus and anti-spam software and frequent password changes.
• Secure your financial information in your home.
• Closely watch your credit score and check it every 12 months.
• File your return early before a crook does it for you. 
• Keep your bank account information confidential
• Don’t keep large or excess cash balances in accounts you use for regular payment activity where others may access account numbers

How to Correct
You may try calling the IRS, but they will likely direct you to file Form 911 Request for Taxpayer Advocate Service Assistance. However, your case may take years to resolve because the IRS currently has a backlog of 650,000 cases.  To make matters worse, tax-identity fraud is often impossible to prosecute when it involves e-filing because it is extremely difficult to find evidence.  E-filing eliminates the use of signed tax forms and envelopes with fingerprints, thus leaving very little physical evidence to make charges stick. 

The IRS favors e-filing because it makes their job easier, however, e-filing has the potential to make your life much harder!