25 Investigates

25 Investigates: Identity theft tax fraud leading to long waits for refunds

BOSTON — According to an annual report by the National Taxpayer Advocate, “Individuals who are victims of tax-related identity theft are waiting an average of nearly 19 months for the IRS to process their returns and send their refunds.”

The Advocate flagged “identity theft” as one of the IRS’ most serious problems.

“The IRS has millions of these returns,” said John Warren, an enrolled agent with Medford Tax Experts. He says the IRS has to sort the real return from the fake ones and that can take time, holding up refunds that many rely on.

“For a lot of people. their refund is their only financial plan. “This is important money to them,” Warren said.

“My heart kind of sank”

A Boston 25 News viewer reached out to anchor and investigative reporter, Kerry Kavanaugh, frustrated.

She says when she contacted her tax filing service and the IRS to report she was the victim of identity theft tax fraud, she felt like just another number.

“My heart kind of sank,” said Pamela Barberio of Marlborough.

Barberio said that sinking feeling came when she went to file for an extension on her 2023 tax return through H&R Block.

“I saw that there were three entries, two of which were failed attempts at filing. And the third one was successful,” Barberio said.

A successfully filed tax return that Barberio says was totally bogus.

“It was a W-2 from a company that I’ve never heard of, have never worked for. And then in the signature panel, there was no signature,” Barberio told Kavanaugh.

She says the thief used her childhood address and bogus contact information. The return did have her real name and social security number.

According to her account, a $600 refund was processing and heading to someone else.

Barberio says she called H&R Block right away.

“She didn’t really ask me a lot of information,” Barberio said. “Just confirmed my phone number and said, you know, somebody from the investigations department would be in touch with me.”

Pamela says weeks later, she was still waiting for a call back about that investigation.

She also called the IRS and was directed to fill out form 14039, or an affidavit of tax fraud.

“He told me that the resolution timetable for these matters is, 120 to 650 days,” Barberio said. “Potentially years.”

25 Investigates contacted H&R Block about Barberio’s case.

In a statement, a spokesperson said “It’s unfortunate that they were able to use this personal information to file a fraudulent return. It’s important to note the bad actor did not obtain any of the client’s data through our systems.”

They added, “It’s unfortunate that all Americans are subject to a dramatic increase in identity theft and other activity by cyber criminals, who grow more sophisticated every year. Our tax experts frequently communicate this problem to filers and suggest ways they can protect their identity and monitor issues. Again, we appreciate you bringing this to our attention so we could ensure the client got the help they needed.”

Barberio said within two days of 25 Investigates calling H&R Block about her situation, she received a call about her claim and was finally getting the help she needed.

Advice on protecting your personal information

Barberio doesn’t know how the thieves obtained her name and social security number. She says she’s always careful and uses two-factor authentication on all personal financial matters.

John Warren says that might not always be enough with the amount of data breaches nationwide, impacting so many.

“So stolen identity is a big problem. The government, the Department of Justice are doing a better job catching the criminals,” Warren said. “And the tax authorities have formed this nationwide security summit. It’s a collaborative effort of state agencies and the IRS and software companies and enrolled agents and attorneys, who come up with methods to stop and prevention.”

Warren says there is one thing all taxpayers can do to better protect their information — get an identity protection personal identification number, or IP PIN.

“This is a six-digit code that today anybody can sign up for. And no one can file a tax return without that special six-digit code attached to the tax return,” Warren said.

You can sign up at irs.gov/ippin.

The pin is good for one year and the IRS will issue you a new one annually.

Warren also says never email your tax records or any personal information. And don’t take photos of them either.

“You shouldn’t use your iPhone as your tax file cabinet,” Warren said.

Instead, share important records using encrypted password-protected file storage.

“Fortunately, for me, that money wasn’t released, but there’s probably many cases in which that money is received by these people,” Barberio said.

“Something like this happens and it’s like, well, just take a number. You’re just another casualty,” Barberio said.

25 Investigates also contacted the IRS. A spokesperson said in a statement “The IRS is committed to protecting hard-working people and small businesses from scammers and fraudsters who try to use the tax system for their schemes.”

The IRS would not comment on how long it’s taking to sort out the fraud and get refunds processed.

“When the IRS takes more than 45 days to process a tax return, the IRS is going to pay interest on the refund that they haven’t issued,” Warren said.

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