A good article brought to you from Washingtonexaminer.com

IRS watchdog warned about identity theft for years

BY SARAH WESTWOOD | MAY 27, 2015 | 11:11 AM

Watchdogs at the Internal Revenue Service have been barking about the threat of identity theft to unsuspecting taxpayers for years.

The agency’s admission Tuesday that identity thieves had stolen personal information from more than 100,000 taxpayers through one of its online services was just the latest victory for identity thieves targeting the IRS.

In 2011, the IRS identified more than 1.1 million incidences of identity theft. The year before, such fraud had drained $5.2 billion from the agency.

A July 2012 inspector general report found the IRS “does not know how many identity thieves are filing fictitious tax returns and how much revenue is being lost due to the issuance of fraudulent tax refunds.”

But the tax agency did little to patch the holes in its security policy in light of the findings. It lostnearly $6 billion to identity theft in 2013, the Government Accountability Office found.

What’s more, IRS officials have given taxpayers who have fallen prey to identity fraud “misleading” information about how long they would have to wait before recovering their stolen refunds.

Taxpayers are being told their wait could be as long as 180 days, the inspector general said in April, but the IRS’s own records suggest the delay in getting refunds could be much longer.

Victims had to wait an average of 278 days to see their cases resolved. In one instance, the IRS didn’t pay a taxpayer their full return for 762 days.

A November 2013 inspector general report discovered the IRS left identity theft casesgathering dust for an average of 277 days because employees were also required to answer telephone inquiries while working with identity fraud victims.

The wait times scarcely improved between 2013 and 2015.

Tax officials’ defense of the slow identity theft relief process — that they were stretched thin by the need to assist taxpayers during filing season — was called into question last month when a House Ways and Means Committee report found “spending decisions entirely under the IRS’ control led to 16 million fewer taxpayers receiving IRS assistance this filing season.”

Instead, the agency had spent millions “prioritizing employee bonuses and union activity on the taxpayer’s dime,” the report said.