Believe it or not, even the IRS gets audited. Unfortunately, the consequences for making a few bookkeeping errors aren’t as severe as they are for average citizens who get called on the carpet for their creative accounting.
The annual audit conducted by the US Government Accountability Office (GAO) turned up such issues as IRS employees fudging their time sheets to reflect hours they didn’t work, invoices for millions of dollars that were overpaid, sloppy internal controls that allowed millions of dollars in tax return fraud to happen every year, and more.
The end result of the audit, and the report being brought to the IRS’s attention, is that the agency has agreed to try to do better in the future, and the accountability office said that’s okay. And while it’s frustrating as taxpayers to know that this kind of roughshod work goes unpunished and costs the taxpayers billions of dollars each year, there are steps you can take to minimize the impact it has on your daily life.
One of the often-overlooked types of identity theft occurs when someone steals your tax identity and files a fraudulent return, essentially taking your refund before you even knew about it. In fact, the only way you would know it had happened is when the notice comes back on your legitimate return, informing you someone has already filed under your Social Security number and been paid your refund. In a handful of alarming cases, citizens have even been charged late penalties after reporting the fraudulent return, as these individuals filed their legitimate returns on paper and the April 15th deadline had passed while they got to the bottom of the mess.
At the risk of sounding overly alarmist, you really have to take responsibility for your own tax return security instead of relying on a bureaucracy made up of hundreds of employees to watch over your financial situation for you. As the audit report indicated, the IRS can’t keep up with invoices worth millions of dollars…how can you expect them to know that a tax return was filed on your behalf by a criminal?
One of the most important things you can do is to stay on top of your Social Security Earnings report. When that arrives each year, are you tossing it in a drawer, or really reading it carefully? Are you opening it and looking to see if there are jobs and income listed that you aren’t responsible for? If there are, then that’s a clear sign that someone is using your Social Security number for employment and can claim your tax return in January. Even if that person doesn’t file the fraudulent return, the IRS only knows that you earned far more money than you actually did, and your taxes will be affected.
Another easy step you can take in order to prevent a fraudulent return is to file your legitimate return as early as possible. Yes, the government gives individuals until April 15th so they have time to gather all of their reporting materials, but that date was established before computer record keeping came along. That date was chosen back when teams of secretaries had to sit at typewriters and type out W-2 forms on all of the employees, then mail them. With computer-based forms and automailing, your forms should be at your house in early January. Don’t wait until April to file, since you’re giving a thief time to file for you.
Hopefully audits of this kind will lead to an attitude of running tighter ships in some of these government offices, but until better security is in place, it falls to individuals to take control of their identities, even their tax identities. Stay on top of your personal information to make sure you don’t get taken advantage of, then end up trying to sort it out with an agency that doesn’t have all of the answers itself.
If you found this information helpful, you may want to consider taking part in the Identity Theft Resource Center's Anyone3 fundraising campaign. For more information or to donate please visit http://www.idtheftcenter.org/anyone-3.