I hope you have read the first four installments of this blog series on tax fraud. If not, I encourage you to go back because this issue is a real eye-opener. The issue is rampant with everyone from drug dealers and gangs to prisoners and foreigners involved in bilking the United States out of BILLIONS of dollars!

A US Treasury audit released last September said that “billions of dollars in potentially fraudulent refunds continue to be paid” as a result of identity theft. If the problem is not stopped, the IRS could issue $21 billion in fraudulent refunds in the next five years. As reported in www.bostonglobe.com.

One indication of the scope of problem is that the IRS has given 1.2 million taxpayers a special code, known as an identity protection PIN number, to be submitted with a tax return. The personal identification number indicates they have previously been the target of identity theft. Just two years ago, only 250,000 people were classified that way.

The theft of taxpayer identities is different from the mass robbery of credit card numbers, as has happened recently at retail chains such as Target. While credit cards can be quickly canceled and consumers held harmless in some cases, the victim of taxpayer identification theft can face months or years of agonizing problems.

We will continue this series next time.