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IRS Isn’t Doing Enough to Help Identity Theft Victims

National Taxpayer Advocate Nina Olson told Congress in her annual report that the Internal Revenue Service is not doing enough to assists victims of tax-related identity theft and tax return preparer fraud. The IRS is instructing its employees to advise identity theft victims that it will take 180 days—half a year— to resolve their cases. Complicated cases inevitably will take longer.

The report also criticized the IRS’s failure to provide tax refunds to victims of preparer fraud. When a taxpayer is victimized by a preparer who receives a fraudulent refund by paper check, the IRS will issue a replacement refund to the taxpayer.

However, the IRS will not issue a replacement refund when a taxpayer is victimized by a preparer who receives the fraudulent refund by altering the bank routing number on a direct-deposit request, even though the IRS has received legal advice that it may do so. Olson said the taxpayer-victim is legally entitled to receive the refund, and the IRS has no legal basis for withholding it.

The report noted that the Tax Code imposes a “significant, even unconscionable, burden on taxpayers.” Since 2001, Congress has made nearly 5,000 changes to the tax code, an average of more than one a day, and the number of words in the code appears to have reached nearly four million.

http://www.accountin...1496a:&st=email

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