College student victim of tax identity fraud - CBS46 News

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College student victim of tax identity fraud

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ATLANTA (CBS46) -

A lot of us wait until the last minute to file our taxes.  Some people are getting an unwelcome surprise when they file online. Someone has already filed for them. It's not April Fools, it's a real problem and one that is growing year to year. And it's costing us, the taxpayers, billions.

Kinsey Simpson is home from college. She's on nearly a full ride at DePauw University. When home, the reality of tough times settles in for Kinsey Simpson and her mom, Cheryl.

"We kind of couch hop from place to place," Cheryl Simpson said.

"She's unemployed so she doesn't have a job right now and it's hard for her to find a job," Kinsey Simpson said.

Kinsey Simpson works while away at school. This is the first year she's filed a tax return.  Like many of us who receive a refund, she had plans for the money.

"It would help pay the remaining balance for college. It could have helped me and my mom out with gas for the week or groceries," Kinsey Simpson said. 

But what she got in return was a surprise. Her e-file was rejected.

"They told me I already had tax returns in my name. I was really concerned because I know I haven't done it at all," Kinsey Simpson said.

In fact, someone fraudulently filed tax returns in her name for the past three years. To file a fake return, all you need is the person's Social Security number.  Kinsey Simpson is one of millions who are a victim of identity tax fraud, in which someone else gets your tax refund.

"It is a huge problem and it is a growth industry," Enrolled Agent Bill Nemeth with Tax Audit Guardian said.

Nemeth sees fraudulent tax returns filed all too often.

"It's easy to do, doesn't take much intelligence. You just put your refund on a cash card. You make up some mailing address and you're in business," Nemeth said.

The IRS will issue a refund to the real taxpayer, but it takes some work.

"You want to report it immediately to the IRS. You follow up then with a 14039 identity theft affidavit. You send that in. You file a police report and then what I do is file the real paper return for the real taxpayer," Nemeth said.

The IRS estimates tax fraud costs billions each year. The Department of Treasury foots the bill,  or rather we the taxpayers do.

Nemeth doesn't believe the IRS is doing enough to stop fraudulent tax returns.

"In my personal opinion they're not. I'm critical of the IRS and their efforts. I think they can do better," Nemeth said.

Here's why: Out of the millions who filed an identity theft affidavit, the IRS only investigated 5,314 of them in 2013. Nemeth said Kinsey Simpson will get her refund, but it may take up to a year.

"It's frustrating to know someone else got money, especially knowing the circumstances that we have to live with on a daily basis," Cheryl Simpson said.

The addresses listed on Kinsey Simpson's returns were an Atlanta home  and a home in Hampton.

"Only the stupid ones put legitimate addresses. But a lot of aren't very sophisticated so they mail them to their home," Nemeth said.

Kinsey Simpson doesn't know if the people at those homes collected her refund. She hopes police will investigate.

"You're stealing somebody's identity and not only is that against the law, you're also putting somebody in a huge disadvantage," Kinsey Simpson said.

Nemeth believes the problem began getting out of hand when the IRS allowed refunds to be put on prepaid cards. That meant people no longer needed to provide an accurate, and traceable, address or bank account number to get a refund.

And Nemeth also offers this advice to stay on top of your information. He said to file a Form 8821. That way you will get a copy of any correspondence with the IRS. If someone files a fraudulent return with a fake address, you'll be notified right away. You can also do this for your kids. Click here for more information and for a link to IRS Form 8821.

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