IRS takes steps to combat identity theft

WASHINGTON (AP/ABC7) - The 2014 budget proposal released by the White House includes new steps to combat what the Internal Revenue Service says is an exponential growth in tax refund-related identity theft.

A preview of the measures provided by administration officials includes increasing criminal sentences for those convicted of tax-related identity theft and creating new civil penalties for those who file fraudulent returns.

The IRS would be able to assess a $5,000 civil penalty for each incidence of identity theft.

Under the plan, the government would also limit access to Social Security Administration files on deceased individuals that have been used by those seeking fraudulent refunds. Instead, the files that the SSA compiles would be available immediately only to those who legitimately need the information for fraud prevention purposes. All other users would have to wait three years for access.

The proposal would also revise the W-2 form that employers must provide the IRS so that it includes an "identifying number" for each employee rather than the employee's Social Security number.

As of the end of 2012 the IRS had more than 3,000 employees working on identity theft issues, more than double from the previous year.

The tax agency says that in 2012 it prevented $20 billion in fraudulent returns, including those related to identity theft, compared to $14 billion the previous year. It says that it stopped 5 million suspicious returns in 2012, up from 3 million in 2011.

Manassas Park resident Shannon Snoots tells ABC7 that she received a letter saying the IRS was holding her refund.

"I'm like 'what refund?, I shouldn't be getting a refund," Snoots says, adding that she owes money this year.

She tried to file her taxes online, but a return was already filed in her name, which prompted that letter.

Fairfax County Police have nearly 100 reports of identity theft already this year.