Drum roll, please. Tax identity theft continues to be one of the worst of the dirty dozen tax scams.
The IRS says more identity thieves are looking for ways to get their hands on taxpayers' personal information. Once they do, they typically file a tax return as the unsuspecting taxpayer and claim a fraudulent refund.
The victimized taxpayer often doesn't realize there's a problem until he files his return. That's when the legitimate filer gets an IRS notice informing him that more than one return was filed in his name and the refund has been sent to someone else.
To fight growing identity theft, the IRS has expanded a variety of anti-fraud methods, including stepped-up internal reviews and computer processing filters to spot false returns before tax refunds are issued. The efforts are paying off. From 2011 through October 2014, the IRS has stopped 19 million suspicious returns and prevented more than $63 billion in fraudulent refunds.
The tax agency also has increased criminal pursuit of tax ID thieves. In fiscal year 2014, the IRS initiated 1,063 investigations, getting criminal convictions and sentencings in 748 cases. More tax identity thieves also went to jail (almost 88% as compared with 81% the year before) and for longer jail sentences (43 months as compared with 38 months).
The IRS has a special section on IRS.gov dedicated to identity theft issues. If you discover or fear you are a tax ID theft victim, contact the IRS Identity Protection Specialized Unit toll-free at (800) 908-4490.