For the past few years, filing my taxes has been a relatively painless affair.
After gathering up the pile of W-2s, 1099s, our mortgage statement, and the various other documents required, I would spend a few hours entering everything into Intuit's (NASDAQ: INTU) TurboTax program. The software led the way, and my role was basically data entry.
It was tedious, and I usually put it off until the calendar had already turned to April, but the actual process took little effort. Type in some numbers, hit send, and wait a few weeks for a refund to show up in my bank account.
I expected things to follow the same pattern this year as I sat down on April 5 to complete the chore, and I was mostly right. Entering my data went smoothly, and I got as far as pressing the send button to transmit my federal return to the Internal Revenue Service and my state forms to Connecticut's Department of Revenue Services.
At that point, however, something went wrong; the software not only told me my returns could not be sent, but informed me that a tax return had already been filed with my social security number.
My first instinct was that perhaps I had hit the send button twice and my documents had already gone through. That was easy enough to check, as TurboTax offers a handy tool for customers which shows whether your tax forms have been sent and accepted by the IRS.
I checked and found that mine had indeed been accepted, except that had occurred on March 31, five days before I had even begun the process. My taxes -- or at least taxes carrying my and my wife's social security numbers -- had been filed, only someone else had done it.
What happened next?
After a frantic search for a customer service phone number I placed a call to TurboTax, where after a 20 minute or so delay someone picked up. The representative listened to my story, verified that a return had indeed been filed under my and my wife's social security numbers, and calmly told me my identity had likely been stolen.
This, the representative explained, has become a fairly common occurrence, where criminals file tax returns using legitimate info in order to have a fraudulent refund sent to them. In many cases the illegitimate refund gets processed and delivered before the actual taxpayer notices anything has gone wrong.
(My Fool colleague Selena Maranjian explains just how common this is here).
At that point I was transferred to a second customer service person, an identity theft specialist, who once again verified who I was and that in fact a return had been filed using our information prior to the one I attempted to file.
Clearly the rep had done this before. She was reassuring and explained to me the detailed steps I would need to follow in order to rectify the situation:
- Call the IRS fraud line at 1-800-908-4490 to report what had happened.
- Fill out IRS form 14039, Identity Theft Affidavit.
- Make copies of our licenses and passports for inclusion along with form 14039.
- File a police report.
- Mail a hard copy of our return to the IRS.
The instructions, which were also sent in an email, also directed me to monitor my credit report for other fraudulent behavior and directed me to the Federal Trade Commission website where I could also file an identity theft report. TurboTax also gave me, my wife, and our 11-year-old son two years of free credit monitoring.
The end (sort of)
Calling the IRS was the least pleasant part of the process, as even at 7 a.m. (when the agency opens) wait times were over half an hour. Once I reached an agent, she was gracious, took my report, and repeated most of what the TurboTax agent said. She also told me that a police report would not be necessary as long as I filled out form 14039.
Unfortunately, filing all of the correct forms and reports and then mailing my taxes does not provide an immediate resolution. The IRS, which has serious staffing issues due to repeated budget cuts, takes six months to rectify identity theft cases, according to the agent I spoke to. That means that my tax refund (around $2000) will remain in the federal coffers for at least that long.
It's actually possible that fake me receives his or her illicit refund, depending upon whether the IRS flags the fake return quickly enough. I'm going to be waiting at least 180 days for my legitimate money while the crook who hijacked my identity could well get paid.
The IRS seems to believe that I'm me and recognizes the other filer is up to no good, but the agency clearly lacks the systems to move quickly in solving the problem. This type of fraud is made possible by the fact that the government reacts so slowly and lacks the proper technology.
I'm fine with waiting for the paperwork to be sorted out, but it seems like the whole mess should be solvable with a call to the IRS and a visit to a notary public. The fact that it's not shows the IRS has a much deeper problem, which makes it likely that this type of fraud will become more prevalent.