Rise In U.S. Identity Theft Cases Involving Income Tax Returns Observed

Washington, DC (AHN) - Identity theft involving income tax returns is emerging as a major problem for the Internal Revenue Service and taxpayers. Complaints received by two federal agencies showed a rise in incidents of using another person's identity over the past few years.

Complaints of this nature received by the Federal Trade Commission reached 20,782 cases in 2007, a 258 percent jump from 2003 levels, while those registered with the IRS Taxpayer Advocate was at 3,327 in 2007, up by a whooping 644 percent over a three-year period.

Nine Olson, head of the IRS Taxpayer Advocate officer, hinted the numbers on record are probably only the tip of the iceberg. "If you want quantification, we don't know... The IRS has no idea how many cases of identity theft exist," Olson told USA Today.

Max Baucus, Senate Finance Committee chairman, ordered the IRS to come up with a comprehensive action plan within 3 months to address the problem, amid admission by IRA Commissioner Douglas Shulman the service's response is far from satisfactory.

Most of the time the goal of the identity thief was to collect a tax refund by claiming multiple dependents. Some of the cases were even committed by accountants who had access to the personal information of their clients. It was also used by illegal immigrants who could not secure employment due to lack of documents.

To address these problems, the IRA recently opened a Privacy, Information Protection and Date Security office to handle all identity theft cases. From time to time, the IRS also comes out with reminders and tips to taxpayers how to avoid being victimized by identity thieves.