”J. Russell George, the Treasury inspector general for tax administration, testified before Congress this month that the I.R.S. detected 940,000 fake returns for 2010 in which identity thieves would have received $6.5 billion in refunds.
“But Mr. George said the agency missed an additional 1.5 million returns with possibly fraudulent refunds worth more than $5.2 billion.”
That's from a New York Times story a couple of weeks ago about a fast-growing new form of identity theft – false tax returns. South Florida, where the problem has been labeled “epidemic” by officials, has the highest rate of identity-theft tax fraud in the U.S. with elders being easy targets:
”Most vulnerable are records from health care facilities, assisted-living centers, schools, insurance companies, pension funds and large stores that issue credit cards. The police say employees steal the information and sell it, an increasingly common practice here.”
It may be rampant in south Florida but don't feel complacent just because you don't live there. Here are a few figures on identity theft in general from the Bureau of Justice Statistics , a part of the U.S. Department of Justice:
• In 2010, 7.0% of households in the United States, or about 8.6 million households, had at least one member age 12 or older who experienced one or more types of identity theft victimization.
• Among households in which at least one member experienced one or more types of identity theft, 64.1% experienced the misuse or attempted misuse of an existing credit card account in 2010.
In regard to identity-theft tax fraud, the Federal Trade Commission reports that “Government documents/benefits fraud” jumped from 10 percent of complaints received by the agency in 2005 to 19 percent in 2010.
My point is that identity theft can happen to anyone. According to the Times story, even a Tampa police officer whose job it is to investigate identity theft along with two dozen other officers “had their identities stolen and tax refunds diverted this year.”
”[T]he problem has gotten so bad that police officers conducting unrelated searches or simple traffic stops routinely stumble across ledgers with names and Social Security numbers, boxes of stolen medical records and envelopes with debit cards.”
Okay, okay. I'm pretty sure you've got the point. The remaining issue is what you can do about it. The simple answer is be alert but let's get more practical that that.
Never, ever give out your Social Security number to anyone who is not required to have it. There is a list here of organizations to whom you are required to provide your Social Security number. You can guess what they are – federal and state government agencies, employers, banks and others who are required to report monetary transactions.
But there is a gigantic catch-22: Your Medicare number is a dead giveaway: it is your Social Security number with a letter attached at the end. The crooks know that too, so while it's common to warn against carrying our Social Security cards in our wallets, few mention Medicare cards.
Although it is becoming less common, many retailers ask for Social Security numbers – they use them, they say, as account or tracking numbers. Wrong! And you should never give out your Social Security number for a purchase. Do keep in mind, however, that if they insist, you may have to give up doing business with that company.
Sometimes it can take months before a victim becomes aware that his or her identity has been stolen, credit cards or loans have been made in the victim's name or a tax refund has been sent to the crook, etc.
The longer it goes on, the harder it is to untangle the mess. One way to track potential ID theft is through the three credit reporting agencies.
Everyone is entitled to one free credit report per year from each of the agencies. So here is a routine that will help keep you up to date on your credit activity: