Many doctors and other healthcare professionals nationwide have been victimized this year by identity theft in which their personal information was used to fraudulently obtain federal and state tax refunds. Tax fraud is a growing problem, with the IRS estimating that it’s become a $4 billion-plus industry.
The number of doctors, dentists, and nurses targeted by identity theft scams has increased significantly this year, raising questions about a possible security breach of medical workers’ personal information. The American Medical Association (AMA) says the exact number of doctors affected by tax fraud isn’t known, but hundreds of cases have been confirmed in Connecticut, Indiana, Maine, New Hampshire, and North Carolina.
KrebsOnSecurity, a cybersecurity blog by Brian Krebs, speculated in an April 2014 post that the spike in tax fraud occurrences against medical professionals is the result of an unannounced data breach at a national organization that either certifies or provides credentials for physicians.
Physicians are a lucrative target for tax fraud because they have the potential for higher tax refunds due to their income levels. It’s common for criminals to file fraudulent tax returns early in the tax-filing season since whoever files first gets the refund. It’s not until the second (and legitimate) tax return is filed that the IRS flags duplicate returns.
U.S. Senator Richard Blumenthal and fellow Connecticut Senator Christopher Murphy have taken notice of the problem and have urged the IRS and Secret Service to dedicate their resources to solve these crimes and prosecute the perpetrators. U.S. Senator Jeanne Shaheen from New Hampshire also called for an investigation.
PYA assisted a number of clients who were victimized by identity theft during the 2013 filing season, and this year assisted an increased number of clients experiencing the same problem. Many of them were physicians or other healthcare professionals.
If you become the victim of identity theft, you are encouraged to contact the IRS at the Identity Protection Specialized Unit at (800) 908-4490, so that the IRS can take steps to further secure your account. That process is likely to involve the use of taxpayer-specific PINs for people that have had issues with identity theft. If approved, the PIN is required on any tax return filed for the taxpayer before a return can be accepted.
For questions about or assistance with tax fraud resulting from identity theft, please contact PYA, (800) 270-9629.
WE ARE REQUIRED BY IRS CIRCULAR 230 TO INFORM YOU THAT THE FOLLOWING DISCUSSION WAS NOT INTENDED OR WRITTEN TO BE USED, AND IT CANNOT BE USED, NOR RELIED UPON, BY ANY TAXPAYER FOR THE PURPOSE OF AVOIDING ANY PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW. THE ADVICE WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED IN THE DISCUSSION. EACH TAXPAYER SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
