What to do when you’re victimized by identity theft or tax return fraud

“But know
this, that if the goodman of the house had known in what watch the thief would come, he would have
watched, and would not have suffered his house to be broken up.” – Matthew 24:43, King James Ver.

Last month, the Archdiocese of Seattle warned
90,000 past and present employees and volunteers that fellow
Catholics’ tax refunds were being claimed by someone else.

The tax fraud – which IRS officials eventually dubbed the
largest of its kind on the West Coast – has impacted more than 1,000 people, an
archdiocese spokesman said. Two Seattle parochial high schools even sent
students home early one day so staff could deal with the repercussions.

Now, the problem appears to have spilled over into the
Archdiocese of Portland. In recent weeks, more than 100 employees and
volunteers in its 29,700-square-mile territory have reported tax-return fraud
as well, spokesman Bud Bunce said last week.

If the lambs of God aren’t safe from identity theft,
who is?

“Coming to a neighborhood near you,” said Archdiocese of
Seattle spokesman Greg Magnoni, only half joking.

This type of identity theft appears to be on the increase
this tax season, government officials and tax pros say. And while the problem
is still confined to a small percentage of taxpayers, ID theft isn’t. With
Target and tax collectors all vulnerable, it’s only a matter of time before it
hits you.

What follows is a cheat sheet
to print and save on steps to take when ID thieves strike.

Tax-return fraud happens when some ne’er-do-well gets a hold
of your name and social security number and uses them to file a tax return,
ostensibly claiming a refund. You don’t discover the breach until you file a
return yourself and the IRS rejects it, saying one has already been filed.

Victims aren’t on the hook for the lost refund; the
government is. But victims must then follow a series of tedious and embarrassing
steps to contain the damage. Plus, any refund owed might be delayed six
months or more.

I won’t get into why the IRS and Oregon tax collectors are
constantly playing catch-up on this matter. But one reason we seem to be
hearing about it more is that the IRS’ computers actually are getting better at
filtering out potentially fraud-fraught returns.

“We’re better at catching them, and it’s exploded,” said Ryan Thompson, spokesman for the agency’s
criminal investigations unit in Seattle. The number of investigations the
agency has launched into refund fraud has increased 66 percent since 2011, he

It’s common enough this season that the Oregon Department of
Revenue last week set up a special webpage and phone number (503-947-2000) for taxpayers to proactively report fraud. It
does this partly because the IRS doesn’t tell Oregon when a return has been

officials didn’t distinguish between tax fraud linked to identity theft and other
types of tax fraud until
this season, department spokesman Bob Estabrook said. Through March 31, the department had
suspended nearly 1,400 returns for possible fraud. Only about 280 appear to be linked to
identity theft, he said.

But that 1,400 figure nearly equals the number of returns
suspended for fraud in all of 2012. And about one-third of Oregon taxpayers,
including yours truly, have yet to file.

“We are seeing a higher proportion of fraud being reported
coming about specifically because of the experience the IRS is having,”
Estabrook said.

Aubrey Buck of Tax Services Inc. of Tigard said more than a
dozen clients have reported tax-return fraud, some related to the Archdiocese
problems. “This is the first year that I have seen
this many clients fall victim to identity theft,” Buck said.

course, if you follow the state’s suggestion and voluntarily report that you’ve
been victimized, your refund will be delayed. Last tax season, the state took
56 days to process a suspended return, twice as long as it took the year
before, according to legislative testimony by a department manager.

“We don’t want to ding the taxpayer for somebody else using
fraudulent information,” Estabrook said. “At the same time, the best way for us
to guard against that fraud is for the taxpayer to let us know they’ve been a

IRS won’t comment on the investigation into the Archdiocese of Seattle’s fraud.
The Federal Bureau of Investigation and an accounting firm hired by the
archdiocese are also investigating. But spokespeople are downplaying initial
indications that the breach might have started with a vendor conducting
background checks of volunteers and employees.

“Some of the people who’ve had fraudulent tax returns filed
against their names and numbers haven’t gone through the background checks,”
said Magnoni of the Seattle archdiocese.

Bunce of the Portland archdiocese said its business affairs
are “totally separate” from Seattle’s. “That’s what’s kind of baffling here,”
he said. “I don’t know what vendors we might use that they might also be

As for when the cause and culprit come to light, God only

In the meantime, here’s what ye mortals can do if afflicted by
this scourge:

  • Ask
    credit-reporting agency Equifax to put a 90-day fraud alert on your file: 1-800-525-6285.
    Equifax will alert the two other large credit bureaus. Also alert lesser-known bureau
    Innovis Data Solutions: 1-800-540-2505.
  • Report
    the theft to the Federal Trade Commission
    to get additional protections:
    Print out the report; it becomes your Identity Theft Affidavit or declaration to
    use as you report the crime elsewhere.
  • Request and review your credit reports from all
    four agencies: Equifax, Innovis, Experian (888-397-3742) and TransUnion
    (800-680-7289). The fraud alert you placed earlier means you’ll get these
    reports for free. Review them for suspicious activities.
  • Put a security or credit freeze on your credit files at
    each agency to keep cards, loans and other services from being approved in your
    name. They’re free for ID theft victims.
  • File a police report with local law enforcement,
    using your FTC affidavit.
  • Notify your bank or credit union, credit-card
    issuers, cellphone providers and utilities. Point West Credit Union in Portland, for
    example, will monitor your account more closely, marketing manager Stephen
    Pagenstecher. Most banks also use card-monitoring services that often catch
    fraud before even card-owners or issuers notice, he said.

  • Keep a close eye on your accounts,
    especially any with debit cards.

  • Contact the IRS and state department of taxation.
    Fill out an Identity Theft Affidavit, Form 14039. You might end up having to
    file a paper return and be given a special Identity Theft Protection PIN to
    file future returns.

— Brent Hunsberger is an Investment Adviser
Representative in Portland. For important disclosures and information about
Brent, visit ORne.ws/aboutbrent. Reach
him by
 or leave a message at 503-683-3098.

Article source: http://www.oregonlive.com/finance/index.ssf/2014/04/what_to_do_when_youre_victimiz.html

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