Brown Promotes Bill to Combat Tax Fraud with Stolen IDs
YOUNGSTOWN, OHIO — Forget having to wait three weeks for a tax refund if you’re filing your return online, or even six to eight weeks if you mail yours in. Ralph Wolfe of Cincinnati reports he’s been told he’ll have to wait nearly a year for his refund, because someone filed a fraudulent income tax return that used his wife’s Social Security number.
U.S. Sen. Sherrod Brown, D-Ohio, used the Wolfes’ plight to illustrate the necessity for legislation that’s intended to combat tax identity theft.
If passed by Congress and signed by President Obama, the Identity Theft and Tax Fraud Prevention Act of 2015 would expedite the resolution of such cases and stiffen the penalties for individuals who commit tax-related identity theft as well as implement ways to prevent such fraud.
During a conference call Wednesday, Wolfe told reporters that his wife, Susan, recently received a letter from the Internal Revenue Service. In it, the IRS informed her that someone had filed a tax return on her behalf. He subsequently checked with his accountant, who said he had not filed the couple’s tax returns.
“That raised all kinds of flags for me,” Wolfe said. He waited on hold for more than an hour and a half the first time he called the IRS, and when he tried again he couldn’t get through. He then tried to use its identity verification service but after entering his information, the system couldn’t verify anything, he said.
“This is very scary because I‘ve never had identity theft before,” Wolfe said. Because of the situation, he and his wife have had to cancel credit cards and contact credit bureaus to make them aware of their situation. “It’s just time consuming,” he remarked.
Wolfe’s story is “all too common,” Brown said. In 2013, according to an analysis by the General Accountability Office, an estimated 5.1 million attempts at identity-theft refund fraud that ran to $30 billion in fraudulent returns were detected, his office reported.
About 4.1 million cases of identity-theft fraud related to taxes were prevented, keeping more than $24.2 billion from going to fraudsters, the IRS estimated, but $5.8 billion was paid in returns later found fraudulent.
The GAO also found that victims wait more than 300 days on average for their cases to be resolved.
“This tax season we need to do everything within our power to protect Ohioans from identity theft and help victims receive the help they need and recover the money they’ve earned as quickly as possible,” Brown said. “Ohio taxpayers work hard. They follow the rules. They deserve peace of mind and they deserve the refunds they’ve earned when they file their taxes.”
The senator also blamed cuts in appropriations to the IRS for the resultant delays in the agency issuing timely responses and its ability to resolve complaints.
Under the legislation, the U.S. Treasury secretary would be directed to implement a plan to resolve identity-theft cases within 90 days of receipt and penalties for tax-related identity theft would increase to up to a $250,000 fine and five years imprisonment.
Other provisions of the bill include phasing out the unnecessary storage and display of Social Security numbers by Medicare and private health-care providers and impose limits on the number of refunds that can be directly deposited to an individual’s bank account or mailing address.
U.S. Sen. Orrin Hatch, R-Utah, chairman of the Senate Finance Committee, is interested in the legislation but wants to see how “tax reform sort of writ large goes,” Brown said.
Brown, who serves on the committee, said he has told Hatch and his staff that this issue and other “common sense things,” such as extension of the earned income tax credit, should be acted on without waiting for major tax reform legislation “because the chances of it passing are not really high.”
Copyright 2022 The Business Journal, Youngstown, Ohio.