Identity theft is one of the fastest-growing fraud issues at the Internal Revenue Service). Online thieves have been capturing Social Security numbers and other tax filing data to file fraudulent returns, principally for the purpose of stealing refunds.
Just this past tax season, TurboTax, the leading tax preparation software company, had to stop transmitting state tax returns and introduce new safeguards after a run of suspicious returns. In March, the U.S. Treasury Department reported slightly more than 2.9 million incidents of tax-related identity theft in 2013, up from 1.8 million in 2012.
As to dollar loss, in January, the General Accounting Office said the IRS had prevented an estimated $24.2 billion in fraudulent identity theft tax refunds in 2013, but actually paid $5.8 billion in refunds later determined to be fraudulent.