The crackdown by the IRS could trap legitimate taxpayers

Kim Henry thought he had a simple tax return this year.

The Fort Wayne resident in Indiana, 59, was expecting a small refund – only $ 327. But after submitting her statement electronically on the first day of tax filing in January, she received a letter from the IRS about two weeks later asking her to verify her identity. She could do it online, by phone or in person.

When she called, the IRS representative asked a series of questions to confirm her identity: address, last income tax return, date and place of birth, mother's maiden name, father's name, and source of income. his income in 2012.

She answered all but one correctly. She no longer remembered the administrator of the investment funds who had sent her a 1099 form in 2012.

This lack of memory was enough to ruin everything.

"She told me that I failed all the identity testing and that I could only get a refund if I went to a local IRS office," says Henry, who has no car.

Fraud detection accelerates

Henry is not alone in his frustration.

Since 2015, when tax identity theft has reached crisis levels, the IRS has intensified its efforts with tax administrations, tax professional groups and software companies. to detect illegal returns and reduce the number of stolen refunds.

The efforts, so far, have been successful. The number of victims reporting tax identity theft has dropped 19% in the first 10 months of 2018, compared to the same segment in 2017, and 72% compared to the same period in 2015, according to reports. latest figures from the IRS.

Yet too many legitimate taxpayers are caught in the reporting process, according to Nina Olson, who heads the Taxpayers' Law Office, a government office dedicated to helping taxpayers solve their problems with the IRS.

Last year, nearly two-thirds of taxpayers caught in the IRS identity fraud filters were legitimate filers. The false-positive rate is expected to be closer to 50 percent, Olson said after talks she had with industry players and financial services companies.

How to check yourself

What triggers a problem of identity theft when returning is not always clear.

"There's just something in the statement that makes the IRS think that it's not the taxpayer," Olson says. "Maybe another statement with the same social security number, so the IRS must determine which is the real taxpayer."

What you need to do next depends on which of the four identity theft letters you have received. Some cases can be solved online or over the phone, while others require a visit in person at a taxpayer assistance center. The letter must specify what elements you need, including the letter itself, last year's return, this year's return and supporting documents such as W-2 and 1099.

"They can ask questions based on knowledge … such as previous addresses or credit cards you have," says Kathy Pickering, general manager of the H & R Block Tax Institute. "If you really are the true taxpayer, chances are you know those answers."

But sometimes you may not remember it, as in Henry's case.

"I've heard people say that they had asked about a car loan contracted years ago," Olson says. "Any of these issues can make you mess."

Repayment period

Even if you go through the verification process, it can take up to nine weeks to get your refund, according to the letter received by Henry.

"What they refuse me is something I've already won," she says.

This delay could be particularly difficult for the working class and poor taxpayers who claim the earned income tax credit – as Henry did – or the supplemental child tax credit, which are subject to review. more in depth about identity theft because they are so valuable.

In fact, even for the first filers, the law does not allow refunds of claims claiming these credits until mid-February, so the IRS has more time to execute them throughout its detection process.

"They target low-income people and put the onus on them to pay back," says Henry, who has not yet resolved his case. "Choosing someone who has a $ 327 refund does not seem to me very profitable."

IRS identity theft letters

If your statement triggers an identity verification process, you will know when you will receive one of the four letters from the IRS.

Letter 5747C: You can only resolve the case by making an appointment in person at a taxpayer assistance center (CTC). You must bring the documents listed in the letter.

Letter 4883C: You must call to resolve this case. When you call, you must have the letter, a tax return from the previous year, the statement of the year for which the letter is intended and all supporting documentation to support these returns. .

Letter 5447C: You can call or write to resolve this case. If you call, you must have the letter, a tax return from the previous year, your last return and all supporting documents. If you send your reply by mail, include copies of all the requested information.

Letter 5071C: You can solve online or over the phone. If you call, you should have the letter, last year's tax return, this year's tax return and all the supporting documents.

TO CLOSE

More people are filing taxes online than ever before.
UNITED STATES TODAY & # 39; HUI

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