Why the IRS can’t tell you what your identity thief took

May, 12 2015 by Carolyn Richardson, EA, MBA

Unless you’ve been living under a rock for the last two years, you are probably aware of the fact that the IRS and the state tax divisions have been faced with an onslaught of fraudulent tax returns filed by identity thieves. These thieves use a legitimate taxpayer’s name, address and social security number to file a fraudulent return claiming a large refund, and then divert that refund to their own accounts. Many of our members have been the victims of this type of theft, and the numbers keep growing. The IRS estimates they received over 2.4 million fraudulent returns for the 2013 filing year.

If you’ve been the victim of this type of identity theft, you’re probably curious about what was on that fraudulent return. How much refund did they get? How close were they in guessing your income? What other information was on there that might have been compromised? And one of the first things you may do is call the IRS to get a copy of the return, in which case the IRS will say “No.” The same will happen if you contact your software provider to get a copy of the return, as they will also tell you they cannot send you a copy of the fraudulent return. You may think this is crazy, but it’s actually the law.

While consumer protection laws are supposed to make it easier for an innocent taxpayer to figure out what the thieves have stolen, those laws do not apply to the IRS. In fact, IRS employees can be seriously penalized for releasing information regarding a return – fraudulent or not – to an unauthorized individual (that means you). Section 6103 of the Internal Revenue Code prohibits the IRS from sharing return information with any unauthorized individual. Not only is this section designed to keep IRS employees from doing such things as looking up celebrity’s returns, but because the fraudulent return may contain information considered “private” to the identity thief (such as a bank account routing and account number), it also prevents the IRS from sharing the fraudulent return with you. Ironically, this section was added to the Code in the wake of revelations that President Richard Nixon had sought IRS audits of his political opponents, which means that the IRS also cannot share specific return information with members of Congress.

Fortunately, there are some options. The IRS will provide a copy of the fraudulent return when it is requested by law enforcement, provided you give your consent to them to retrieve it. So it is worthwhile filing a police report of the theft, even if you don’t think it will go anywhere. You at least will have a local police office to contact and push to request the return. Apparently, many police are unaware they can do this as the IRS received only 7,000 requests for return copies last year.

Your tax software provider will also provide a copy of the fraudulent return by submitting a written request and verifying their identity.

And as always, TaxAudit is here to help. If you believe you have been the victim of return-related identity theft, contact us immediately. Our audit representatives will respond to any IRS or state notices you may receive for a covered year related to the identity theft, which may include collection notices or “erroneous refund” notices, and help you get your account corrected with the tax agency. Since it can take up to a year to resolve these problems with the IRS, do you really want to try to handle it on your own?