IRS Refunded $4 Billion to Identity Thieves in 2013

As millions of Americans filed their tax returns this past week, identity thieves had already filed bogus for over a million dollars. In 2013, the IRS issued $4 billion dollars in returns to identity thieves, and the problem continues to grow.[1] According to Brian Krebs, security reporter, scammers hacked more than a half-dozen U.S. companies and filed bogus returns on nearly every employee.[2]

While tax fraud has been going on for years, this new automated process for mass tax fraud is a recent innovation. Alex Holden, chief information security office at Hold Security, suggests that businesses need to take an in-depth look at the current HR resources they are using. “Companies should look at their human resource infrastructure to ensure that payroll, taxes, financial, medical, and other benefits are afforded the same level of protection as their other mission-critical assets.”

In spite of the threat, the IRS is aggressively tackling this problem. According to J. Russell George, Treasury’s inspector general for tax administration, the IRS prevent over $12 billion from being sent to identity thieves in 2013 and $8 billion in 2012. “Identity theft continues to be a serious problem with devastating consequences for taxpayers and an enormous impact on tax administration,” George said in a statement. The fraud “erodes taxpayer confidence in the federal tax system.”

Victims of identity theft should contact the IRS Identity Protection Specialized Unit, toll-free at 1-800-908-4490 so that the IRS can take steps to further secure your account. This will involve a tax-payer specific PIN for help with future filing.

[1] Associated Press. “IRS refunded $4 billion to identity thieves last year, inspector general’s report says.” CBSNews.com, November 7, 2013.
[2] Brian Krebs. “Crimeware Helps File Fraudulent Tax Returns.” Krebsonsecurity, April 14, 2014

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