Readers of my column know that I am not exactly fond of the government. You also don’t have to be a reader to know that very few people are fond of the IRS.
As it happens, however, there is one quasi-reason to be fond of the IRS: The fact that they’re not fond of IRS fraud.
Sure, that’s really just the IRS trying to make sure nobody defrauds the federal government … but in the end, that still helps you and me.
I got a strange letter in the mail last week from the IRS. Thankfully, it was not an audit notice. No, it was the 5071C letter, which asks you to verify your identity with the IRS in order to eliminate IRS fraud.
Suspecting a IRS scam, I researched the letter and it turns out that the 5071C letter is, in fact, very real indeed. I didn’t know why the IRS wanted to verify my identity, but I figured it was going to be a pain in the behind and take up too much time.
I went to the idverify.irs.gov website. I was asked a few questions that mirror those one sees when trying to access one’s credit report form the credit bureaus. Right away I was annoyed.
The first question asked what address might be associated with a name of a person I had never heard of. Well, it had the first name of my ex-wife, but the last name was ridiculous. Of course, I answered “none of the above.”
The other questions weren’t much better. So of course, my verification was rejected and I was kicked over to the dreaded toll-free phone number, which I knew meant a very long time on hold.
So I was on hold for about 35 minutes, which I used to clear my desk and pay my bills while listening to that horrible music. Finally, an IRS representative came on line. I told him why I was calling and he said it wasn’t a surprise, since virtually nobody appears to be having success with the online verification.
We went through some basic identification questions before getting to entries on my 1040 tax return. We went through the entries on a few lines and that’s when he said:
“It appears I am looking at a fraudulent return, in your name, with your Social Security number, trying to get a $9,000 refund.”
Oh, snap.
That’s when I learned that I was the victim of identity theft, which I thought could never happen because I am extremely careful with my information. My guess is that my information may have been compromised from a recent high-profile hack on a major corporation.
I also learned that this is particularly bad year for this identity theft-related fraud. The way it works is the criminal who has engaged in identity theft will file a false return, go for a big refund, open a bank account that is linked to a reloadable debit card, collect the money, spend it, and shut down the associated bank account.
So while I can’t say the IRS was looking out for me so much as looking out for the Treasury, I admit to appreciating that this happened.
So, yes, verify your identity with the IRS. Report your identity theft if it happens, and always monitor your credit.
Lawrence Meyers is the CEO of PDL Capital, a specialty lender focusing on consumer finance. He has 20 years’ experience in the stock market, and has written more than 1,200 articles on investing. He also is the Manager of the forthcoming Liberty Portfolio. Lawrence Meyers can be reached at TheLibertyPortfolio@gmail.com.
