The IRS did not notify 1.1 million taxpayers that their identities were stolen, according to a report from the Treasury Inspector General for Tax Administration.
"In cases of employment-related identity theft, the discrepancy results from the innocent taxpayer’s stolen identity being used by another individual to gain employment," the inspector general states. "This can cause significant burden to innocent taxpayers, including the incorrect computation of taxes based on income that does not belong to them."
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The 1.1 million cases of identity theft that the inspector general found from February 2011 to December 2015 involved so-called Individual Taxpayer Identification Numbers that did not match the Social Security numbers that were listed on other documents included with the tax return, such as a W-2.
The inspector general said that the IRS is in a unique position to identify these cases and should alert taxpayers when these occur.
"We recommended that the IRS implement procedures that are proactive in timely alerting taxpayers when the IRS becomes aware that a taxpayer’s identity has been stolen," said the inspector general. "Although the IRS agreed with the recommendation and responded that it was taking corrective actions, taxpayers identified as victims are still not being notified."
The IRS announced in July that it would begin to notify victims of identity theft beginning next year.
"We've developed our going-forward path and we will begin in January 2017 notifying all victims of such employment related identity theft that we identify," said Karen Schiller, commissioner at the IRS.
"As we continue to battle and make progress against all strains of identity theft in the tax ecosystem, we recognized that we were missing an important partner in this effort—the taxpaying public," Schiller said. "So starting in November 2015, with the strong support of all the Security Summit partners, we launched the ‘Taxes, Security, Together’ campaign to raise awareness about actions people can take to protect themselves and avoid becoming victims of identity theft."
"As part of this public awareness campaign, the IRS, in the weeks leading up to the 2016 filing season, issued weekly tax tips describing the actions people could take to protect their data," she said. "We have updated several publications for taxpayers, and will continue to spread awareness of the importance of protecting your personal information."