|Notify the ISMA|
|Please notify the ISMA if you have been victimized by this tax scam 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.|
On March 22, the ISMA received a report about an identity theft and tax fraud scam directed at physicians. The ISMA investigated and immediately issued an alert to its members. The initial and subsequent alerts generated significant feedback from physicians. That information, along with ISMA's additional research, revealed that the scam was widespread. According to all reports, fraudulent federal and/or state tax returns are being e-filed using physician names, addresses and Social Security numbers. Some returns have reportedly also included the name of the physician's spouse, another physician, or a patient.
At this time, it is unknown how the physicians' information was obtained. Additionally, no common link among the victims has been identified. The majority of the reports to the ISMA have been about Indiana physicians (both ISMA members and non-members), but the ISMA has also heard of dentists, nurses, and oral surgeons being impacted, as well as out-of-state physicians. The ISMA was not the source of the data breach.
How to determine if you are a victim
Physicians have learned they are a victim of this fraud in several different ways. Some have received a 5071C letter from the IRS with instructions to contact the IRS identity theft website. Other physicians have received a rejection notification when they attempted to electronically file their taxes. The rejection notification indicates the return cannot be submitted because a return has already been filed under that Social Security number. Some physicians have learned of the fraud when they received a tax refund check in the mail before even filing a tax return. Finally, other physicians have learned that someone opened a prepaid, general purpose reloadable card in their name for purposes of receiving the fraudulent tax refund.
This fraud has occurred at both the state and federal level. 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 whose returns are rejected will have to generate and mail a signed paper return at both the state and federal level.
- Your Tax Preparer – Notify your tax preparer immediately, if they are not already aware. They may be able to execute an IRS and State Department of Revenue Power of Attorney form, which allows them to discuss and help resolve your situation with the taxing authorities on your behalf.
- IRS – If the IRS sent you a 5071C letter notifying you about fraud concerns, it will provide instructions about contacting the IRS through its identity theft website, or by phone at (800) 830-5084 to notify officials you did not file the return referred to in their letter. Complete an IRS 14039 Identity Theft Affidavit to describe what happened. You will need to file a paper return, attach your completed Identity Theft Affidavit, and any additional notices from the IRS, such as the 5071C letter. 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. Federal tax refunds will likely be delayed for significant periods of time, perhaps 6-9 months.
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.
- Indiana Department of Revenue (IDOR) – Physicians who are victims of federal tax fraud will need to file a paper return at the state level also. Also, physicians who have determined that they are victims of tax fraud should notify IDOR by calling (317) 232-2240. There is no complaint form to fill out, but your call will be routed properly to the investigation unit. State tax refunds may be delayed, but only by a few weeks, according to the IDOR.
- Office of the Indiana Attorney General - Physicians affected should file an Indiana identity theft complaint here. Their investigations are complaint driven, so having more data about the victims could help identify the source of the compromise. Additional tips, suggestions and a helpful Identity Theft Victim Kit are also available on their website.
- Federal Trade Commission (FTC) - File an identity theft complaint with the 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. To determine if 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.
- Financial accounts – Physicians should also consider taking steps to protect their various financial accounts, such as by running a credit report or placing a credit freeze on any existing credit cards. The FTC, AG, and DOJ websites referenced above provide several suggestions on how to protect your financial interests in the event of identity theft.
- Additional information - Consult the U.S. Department of Justice website for additional information and checklists about identity theft and fraud; visit the DOJ website.
The ongoing investigation
The ISMA continues to stay actively involved in this matter and forward information available regarding the scam to the relevant enforcement agencies. The goal is to ensure that it is properly investigated and resolved.
To date, the ISMA has notified key federal and state agencies, including the IRS Identity Protection Specialized Unit, the FTC, the FBI, the Indiana Department of Revenue, the Indiana Attorney General Identity Theft Section, the Indiana Professional Licensing Agency (including the Medical and Nursing Boards), and the Indiana Department of Insurance.
The ISMA has also alerted the members of the Indiana General Assembly and the entire Indiana Congressional Delegation.
The ISMA has also notified various third parties, including hospitals, other state and national medical associations and the Indiana CPA Society.
“The Indiana Department of Revenue has been catching and stopping hundreds of the fraudulent claims and saving millions of dollars,” said Bob Dittmer, IDOR spokesman.
Dittmer said the department hired eight new tax investigators whose only job is to uncover fraudulent claims.
While some fraudulent claims have been successfully identified by IDOR before they were actually filed, others have not been identified as fraudulent until after they were filed. “They are viewing this as a large problem and are very concerned. While their investigation has not yet identified the source of the presumed breach, they are tracking all the cases, looking for patterns, and actively investigating and pursing leads,” said Julie Reed, ISMA general counsel, who spoke with the IDOR investigation unit.
“We are maintaining contact with state and federal authorities. We have received assurances from the Indiana authorities that they are investigating this matter and intend to pursue it to its fullest.” Reed said.
Chuck Taylor, of the Indiana Attorney General's Identify Theft Unit, said, "Our office is actively investigating the complaints we have received to identify a common source of compromise. We urge victims to monitor their credit reports to detect any additional fraudulent use of their personal information. Anyone who believes they have been affected should file an identity theft complaint.”
The ISMA has offered to assist the DOR and the Office of the Indiana Attorney General in any way possible.
Please notify the ISMA if you have been victimized by this tax scam 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.
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