tax-identity-theftImagine this scenario: you’ve gathered up all of your tax information for the year and you’ve gone though the time-consuming, often tedious and frustrating, process of getting your taxes filed. You’ve crossed your T’s and dotted your I’s and now you’re finally ready for that final step. The “submit” button to send your tax return to the IRS is all that stands between you and your taxes being finished for the year. Then, you can finally breathe a sigh of relief, wait for your refund to show up and put your taxes behind you for another year. You hit the button to e-file your return and the euphoria starts to hit.

From Elation to Agony

But suddenly, everything comes to a crashing halt when you get a notice that tells you something to this effect: “The IRS cannot accept your return because it has already received a return in your name.” That feeling of euphoria is rapidly replaced by disbelief, then anger and then panic. How could this be possible? This is the only return that I’ve field this year. This cannot be possible. What is going on? Unfortunately, most likely, the answer is that someone else has stolen your identity and already cashed your refund. Not only have they taken your refund, but they probably have your valuable personal information as well. This scenario is all too real for thousands of taxpayers every year.

Billions Lost Every Year

It’s estimated that by 2016, the IRS will pay out nearly $21 billion in fraudulent tax refunds. Just two years ago, that figure stood at about $6.5 billion. The number keeps going up and one of the biggest reasons is that the IRS simply doesn’t have an effective system in place to stop it. Any fraudster who can obtain your name, birthdate and Social Security number could file a false tax return and steal your tax refund. What’s more, they can falsify that return and claim even more than what you would have actually received.

Is the IRS Turning a Blind Eye?

You would think that anyone reporting this kind of incident to the IRS would motivate the country’s top tax agency to go after the scammer. However, it seems that the IRS has better things to do and that if you want to track the person down who has stolen your refund you will have to do most of the work, yourself. According to one victim, the IRS told him “that the matter would not be investigated further until a fraud affidavit and accompanying documentation were processed by mail.” The IRS even informed this victim that someone else had registered through the IRS’s own website with the victim’s SS number. However, the IRS would not give any personal information about the fraudulent filer because that would violate its privacy regulations.

What Can Be Done?

Fortunately, this victim didn’t give up and was eventually able to track down the person who was responsible for filing his fake return. It turned out she was an unwitting pawn in someone else’s scam. So, can you do anything to prevent this kind of thing from happening to you? Fortunately, the answer is yes. First, after you prove that someone has filed a fake return, eventually the IRS will send you your refund. However, the best thing to do is to prevent this kind of scenario from ever happening in the first place. To do that you should head to and sign up to create an online account before a scammer does it for you. With this account you can access a transcript of all your account activity, which will allow you to see if any suspicious activity is occurring.

Don’t Become a Statistic

The old saying goes: an ounce of prevention is worth pound of cure. In other words, if you don’t want to become part of another fraud statistic, then be proactive and take a few minutes to create your account as soon as you can. Those few minutes on the IRS website will pale in comparison to the huge mess you will have to deal with if your identity is stolen. It’s your money; don’t let someone else take it.