Lawmaker warns against tax-return ID theft

Noting that incidents of taxpayers whose tax refunds were stolen through identity theft more than quintupled last year, Rep. Steve Israel on Friday urged people to protect themselves against a "growing new criminal enterprise."

Standing with a Smithtown man whose $3,600 refund was stolen last year, Israel (D-Dix Hills) also called on the Federal Trade Commission to take more steps against the crime.

"Tax time shouldn't be a time of ripoffs. But an increasing number are learning they are being ripped off through identity theft," Israel said at the IRS' Hauppauge office.

According to Israel, the IRS in 2010 identified 49,000 cases nationally in which someone stole a taxpayer's identity and then fraudulently filed for and received their refund. The schemes led to a total of $247 million in refunds being obtained fraudulently. Those figures jumped in 2011, to 262,000 cases involving $1.5 billion.

In January, the Manhattan U.S. attorney indicted a Yonkers man, saying he had impersonated an IRS and a state labor department employee to get victims' Social Security numbers and other information needed to file tax returns as other people.

Israel warned of another approach, saying, "If you get an email from the IRS asking for personal information, you are being scammed." According to the charging papers, fake W2 forms are submitted with the returns. The money is either sent to other addresses controlled by the person submitting the false returns, or deposited into bank accounts they set up. In one case, the Manhattan U.S. attorney said, the scheme involved filing false returns and having refunds sent to people on a mail carrier's route. The postal worker was paid to collect the checks.

Christopher Madonna, 70, of Smithtown, said that in April he filed a paper copy of his tax return, seeking the refund. But in May, he received a letter from the IRS saying his return was being reviewed because the agency had received two tax returns under his name.

In August, the IRS told him he had been the victim of identity theft. Madonna said he didn't receive his refund until October.

Avoiding tax-season identity theft

Do not respond to emails purporting to come from the IRS seeking personal information.

Forward any suspicious email to phishing@irs.gov

Respond quickly to IRS notices about receiving multiple tax returns.

Use a strong password when filing electronically.

Report identity theft involving taxes at ic3.gov

File early, before someone who's stolen your personal identification can file a return first.

"I used to work in the insurance business so I understand that these things [identity theft] happen," Madonna said. "I knew things would get resolved after I contacted the congressman."

Madonna said at the news conference that he'd dealt with fraud before as the owner of an insurance company. In a news release from Israel, Madonna said "As a victim of tax-refund identity theft, I can tell you firsthand this is a serious issue."

IRS spokeswoman Dianne Besunder said the agency has taken the issue seriously, posting information on identity theft on its website(http://www.irs.gov/privacy/article/0,,id=186436,00.html). She also said that the IRS, working with the U.S. Justice Department's Tax Division and local U.S. attorney's offices around the country, last month targeted 105 people in 23 states. She said the sweep led to 939 criminal charges involving tax-related identity theft.

Israel said the FTC had primarily focused on more traditional forms of identity theft, including credit card fraud. He called on the agency to focus more attention on the emerging problem involving tax refunds. An FTC spokeswoman did not respond to an inquiry.