Update on identity theft tax return scam

The ISMA has received multiple reports of an Internal Revenue Service (IRS) tax scam directed at physicians. According to the reports, someone is filing fraudulent federal income tax returns using physician names, addresses and Social Security numbers.

ISMA members have reported some notices also include the name of an unknown person as spouse, and it appears this other name is that of a prior patient of the physician. At this point, no common link among the victims has been identified. The majority of the reports to the ISMA have been about Indiana physicians, but the ISMA has also heard of someone in another Indiana health care profession being impacted, as well as an out-of-state physician.

Contrary to early reports, the IRS has not issued an alert on this issue. Rather, the majority of affected physicians are first becoming aware of this when they receive a 5071C letter from the IRS alerting them of possible fraud. Other physicians are receiving a rejection notification when they attempt to electronically file their taxes. It indicates the return cannot be submitted because a return has already been filed under that Social Security number. At least one physician learned of the fraud when he received a large tax refund check before filing a tax return.

Your Next Steps - Act Quickly

  *  IRS - If you have become aware that you are a victim of this scam, the IRS 5071C letter provides instructions about contacting the IRS through its identity theft website, or by phone at (800) 830-5084 to let officials know you did not file the return referred to in their letter. If you are a victim, you may not be able to electronically file your return this year since a return with your Social Security number has already been filed. You'll need to file a paper return and attach an IRS 14039 Identity Theft Affidavit to describe what happened.

Also attach copies of any notices on this issue that you received from the IRS, like the 5071C letter. Be sure to let your tax preparer know if this happens to you. Verify with the IRS and your tax preparer where to mail your paper tax return, based on the type of return you are filing and your geographic area.

If you have not received a notification from the IRS but believe your personal information may have been used fraudulently or are concerned about whether you may have been victimized, you may call the IRS Identity Protection Specialized Unit at (800) 908-4490. Find more information from the IRS, including forms, at the IRS website.
  *  Office of the Indiana Attorney General - Physicians affected should file an Indiana identity theft complaint here. Lyman Taylor, section chief of Consumer Mediation & Identity Theft, said having more data about the victims could help identify the source in an investigation. Additional tips, suggestions and a helpful Identity Theft Victim Kit are also available on their website.
  *  FTC - File a complaint with the Federal Trade Commission (FTC) here. This not only helps the FTC identify patterns of abuse, but the printed version becomes your Identity Theft Affidavit. That Affidavit, along with a police report, becomes your Identity Theft Report, which you will need. The FTC recommends several other immediate steps to take and provides other helpful information at the FTC website.
  *  Police Report - Consider filing a report with the local police in the jurisdiction where you reside. Bring with you all documentation available, including the state and federal complaints you filed. This will likely be necessary if there is financial account fraud as a result of the identity theft. However, if the only fraud is tax fraud, the police report will only be necessary if requested by the IRS.
  *  Social Security - Call the Social Security Administration's fraud hotline at 800-269-0271 to report fraudulent use of your Social Security Number. In case your number is being used for fraudulent employment, you can also request your Personal Earnings and Benefit Estimate Statement or call 800-772-1213. Check it for accuracy.
  *  Additional information - Consult the U.S. Department of Justice website for additional information, including checklists, about identity theft and fraud; visit the DOJ website.

Tax Filing Tip
Do not wait until the last minute. Because some physicians do not become aware that they have been victimized until they attempt to electronically file their taxes, and those returns will be rejected, physicians should not wait until the last minute to electronically file. Affected physicians may learn they have to generate and mail a signed paper return.

ISMA Next Steps
The ISMA continues to investigate this matter and forward information available to the relevant agencies with enforcement authority to ensure it is properly investigated and resolved. To date, the ISMA has notified the IRS, the FTC, the FBI, the Indiana AG, and the Indiana Department of Insurance. The ISMA is also notifying other state and national medical associations, local law firms and the Indiana CPA Society.

Please notify the ISMA if you have been victimized by this tax scheme so we can convey the scope of the situation to the proper authorities. Call the ISMA legal department at (800) 257-4762 or (317) 261-2060.