You may already be out hundreds, even thousands of dollars and not know it! A rampant new form of identity theft targets your tax return; and it's difficult to catch, because victims likely won't find out until they start looking for their tax refund.
In Florida, the fraud is as bad as anywhere. Stop by virtually any Internal Revenue Service office in the Sunshine State, and you'll find victims.
"No, I don't know how it happened," said one man, while another chimed in that he lost $8,000 dollars, "I am sick over this."
A couple who retired to Florida and had never had an issue with the IRS couldn't believe they'd become victims, "For somebody to just take what we work for? I don't understand how the IRS or anybody is letting that happen. It's like- why!?"
The answer begins with a letter from the IRS informing you that your tax return is "rejected," because your social security number "has already been used" -- by a thief!
"The thieves are very, very… they're smart!" says Kler Miller, an accountant and consumer tax expert for KEL Attorneys. She's seeing more people every year, victimized by this kind of identity theft, "Absolutely! It hurts the [victims] financially, especially for the single moms… or [people who] just need the extra money for daycare or to help with the household. It just doesn't come as soon as they needed it."
Here's how the theft happens: while you're waiting on your W-2s in the mail, or just waiting to file your return, the crooks are working fast! They've already stolen your social security number. Then, they cook-up a fake W-2, file it, and get your return money before your real info ever makes it to the IRS.
"And the IRS? They're not cross-referencing it quickly enough," Kler Miller explains. "They're just getting all these returns, see the refunds… There's some cross-checking but not that much. Then it gets refunded."
The problem is bad enough in Florida, Congresswoman Debbie Wasserman Schultz took to the House floor asking for legislation to address it. Florida Senator Bill Nelson even brought the IRS's Deputy Commissioner for Enforcement Steve Miller to a Senate committee to testify.
"We are increasing the amount of work we do up front to prevent the fraud before the refund goes out," the IRS's Miller told Fox after that hearing.
Still, for recent victims of tax return fraud, is the IRS doing enough? "Hell no! They're not," exclaimed one woman waiting outside a Florida IRS office, "No, because it's not being fair to us."
A recent report from the Government Office of Accountability shows it is getting worse. From 2011 to 2012, cases of this kind of fraud nearly tripled!
Until something is done, is there a way to prevent it from happening to you? "No, there isn't a 100% way," Kler Miller told us filing your return ASAP is your best protection.
If do you become one of the millions of victims, be ready to wait up to a year for your tax return. "For the next couple of years afterward, when they do file the return, it's pretty much inspected by 12 people in that department," KEL's Miller explained. "So you don't get your refund as quickly."
Tax experts also say not even the paid identity protection services can prevent this kind of fraud. That's because the IRS does not share information with those companies.