The Associated Press recently reported that the President’s 2014 budget includes measures to combat Identity Theft particularly ID Theft related to IRS tax refund fraud- the fastest growing type of identity theft. Identity theft has been the #1 consumer complaint for 13 consecutive years. Tax refund fraud made up over 40% of all identity theft complaints reported to the Federal Trade Commission (FTC) in 2012, and increased nearly 140% compared to 2011.
The budget proposal includes civil penalties for these identity thieves that commit IRS tax fraud; revisions to W-2 forms so that consumer Social Security numbers are not visible; and limiting access to the Social Security Administration (SSA) Master Death Index, which publishes the Social Security numbers (SSn’s) of deceased Americans.
Civil fines for convicted tax fraud identity thieves would be assessed at $5,000 for each incidence of identity theft. Thieves that are skilled at this type of fraud are filing several fraudulent tax returns every day. For example, one couple that was prosecuted received over one million dollars by filing 220 fraudulent tax returns. Under the new budget proposal such a couple would have been fined 1.1 million dollars in addition to the criminal penalties of restitution and a prison sentence.
Thieves can obtain sufficient information to commit tax fraud and identity theft from employer files. The W-2 forms provide all of the victim’s information including the victim’s Social Security number and earnings that is necessary for a thief to file a tax return in the name of a victim and obtain a tax refund.
Under the budget proposal W-2 forms would be revised to include an employee identifying number instead of the employee’s SSN.
Also a suspected hotbed of information for criminals is the Social Security Administration’s Master Death Index. A major goal of the index is to prevent fraud by allowing creditors to check and see applicants are using the SSN or name and SSN of a deceased person. The budget proposal seeks to limit access to the index to those that have a legitimate need to access it.
All these measures are key to mitigating ID Theft incidences. For more information on steps to take for ID Theft protection, please visit www.hvshred.com