NY1 For You: State Lawmaker Finds Tax ID Scam Disturbing
After seeing NY1's recent story on tax identity theft, one state senator says they'll be working to prevent others from falling victim. NY1's Susan Jhun filed the following "NY1 For You" report.
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For Sharon Hawa, tax time is especially taxing since twice she's been the victim of tax identity theft.
"E-filing and direct deposit doesn’t require any validation of personal identity," Hawa said.
A major loophole in the e-filing system is allowing identity thieves to steal taxpayers refunds. It's a problem NY1 first reported last week. And it's all disturbingly simple. When filing online, the only personal information an individual needs is a social security number and an Employer Identification Number, and EIN numbers can easily be found online.
As for the rest of the information, identity thieves make it up. They file early before taxpayers receive their W2 forms, so they get the taxpayer's refund before the taxpayer even files. And all the thieves have to supply is a routing number to have the refund directly deposited into their account. NY1 asked the IRS what's being done to protect taxpayers and a spokeswoman responded by saying, "Over 400 million returns have been electronically filed since 1986 without a security incident...IRS e-file meets or exceeds all government security standards."
The IRS response came as a surprise to State Senator Eric Adams, who contacted NY1 after seeing the story.
"Imagine if that was the mindset of law enforcement, millions of people walk the street only a small number are victims of a robbery, does it mean that you ignore robberies? When you identify that there's a crack in the process, you go seal the crack," Adams said.
The senator says he now plans to create a bill to protect taxpayers who file online.
"What I'm going to require in my law, is that you have to actually go into one of the e-file locations at least one time to get your ID on file there so they know who you are and they should supply you with the secure account that you're going on to," Adams said.
The IRS spokeswoman said the agency had no further comment. But for taxpayers like Hawa, Adams' proposal may keep the thieves at bay.
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