IRS Releases Plan for Fraud Victims to See What Thieves Stole

The Internal Revenue Service has introduced a formal policy to assist identity-theft victims in getting copies of bogus tax returns filed in their name.

The measure comes after a surge in taxpayer identity theft during the 2015 filing season left many victims frantic to learn how much of their personal data thieves had obtained. Many were then frustrated by the agency’s refusal to provide answers. The logjam was reported by Bloomberg News in April and drew the attention of Republican Senator Kelly Ayotte of New Hampshire, who put pressure on the agency to act.

The IRS, which posted instructions for fraud victims on its website for the first time this month, said it would acknowledge requests for copies of returns within 30 days and respond within 90 days. Due to strict IRS privacy laws, some of the information will be redacted to prevent fraud.

“We have decided to change our policy regarding disclosure of fraudulent identity-theft returns to victims,” IRS Commissioner John Koskinen wrote in a May 28 letter to Ayotte. At that time, the IRS said it would develop a way for people to access the fraudulent returns.

The IRS said in June that identity thieves had stolen information on about 100,000 U.S. taxpayers from the agency’s website and used the data to file some 13,000 fake 2014 tax returns and get about $39 million in refunds.

The agency had said part of the problem in getting the fake returns to victims was a conflict in existing policies. While the IRS legal department allowed sharing such information in certain cases, employees were following a section of the tax code that said they could face criminal penalties for improper dissemination of personal data.

Many of the identity thefts resulted from thieves getting past security filters on the agency’s website, according to the IRS. That allowed them to gain access to past tax returns, which contained the information they needed to file fake returns. In August, the IRS said it identified an additional 220,000 taxpayers whose information may have been compromised.

The new policy, detailed on the IRS website, lets taxpayers request a copy of a fraudulent return by mailing a letter to the IRS and including information such as their Social Security number and proof of identity like a copy of a driver’s license or passport.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE