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What Can The IRS Do To Fight Identity Theft?

Tuesday, October 27, 2015
Summertime isn’t typically the time when we think about income taxes; however, there has been so much going on with income tax identity theft that we may not help thinking about it. We have all heard of Income tax identity or know someone that has been affected. This is nothing to sweep under the rug.  Identity theft is a major problem occurring nationwide and the IRS estimates income tax identity theft costs the nation nearly $6 billion each year.

The main concept of income tax identity theft is very straightforward. This scheme occurs when a scam artist tries to obtain your personal information, such as your name and Social Security number in order to file a fake income tax return in order to receive a tax refund payment from the IRS directly to their account.  This scheme is very easy for identity thieves and it is becoming more and more common. Most recently, gangs, such as one in the Long Beach, California area, have conducted income tax identity theft and were arrested. The gang stole over $3 million. Also, in New Jersey, a gang was charged for income tax identity theft which included creating counterfeit W-2s.  Another gang of 23 members in Florida was indicted on various identity theft charges which occurred in at least 39 states that are known of.

The IRS also had its own conundrum with the hacking of its "Get Transcript" program in May 2015. Originally, the IRS disclosed that approximately 104,000 taxpayers were victims of the data breach; however, it turns out that the number of taxpayers that were affected is much closer to 330,000. The IRS had to pay out over $50 million dollars in fake tax returns due to the tax information that was stolen. Due to this incident, the IRS had to shut down the "Get Transcript" service so that identity thieves would not retrieve the transcripts of income tax returns that included personal identifiers that could lead to income tax identity theft.

Due to the IRS data breach, tax attorneys have proposed a class action law suit since the IRS failed to protect thousands of taxpayer’s personal and sensitive information.  From now on, the IRS has created new regulations regarding the 30-day extension to file W-2s.  The extension will reduce the amount of time for employers to file paper W-2s. If they file by mail, they must do so by last day of February. If filed electronically, then the due date is March 31.  The hope is that employers will not extend these new deadline.  Tax advisors want Congress to add another simple step so that W-2s can be filed with the Social Security Administration and with the IRS. This step can ultimately help decrease the income tax identity theft in the long run. Congress is currently not doing anything about this.

There are many things can trigger the attention of the IRS and income tax identity theft is the hot topic of the moment.  If you need tax advice from Payroll Tax Attorneys and CP504 Attorneys, the Strategic Tax Lawyers can help!  The Strategic Tax Lawyers, LLP is a firm made up of an expert California Tax Attorneys, with years of experience in tax-related and IRS issues.  For a free consultation to assist you with your tax-related issues contact the Strategic Tax Lawyers at (800) 669-4775.