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United States Government Accountability Office: 
GAO: 

Testimony: 

Before the Subcommittee on Fiscal Responsibility and Economic Growth, 
Committee on Finance, U.S. Senate: 

For Release on Delivery: 
Expected at 2:00 p.m. EDT: 
Wednesday, May 25, 2011: 

Taxes And Identity Theft: 

Status of IRS Initiatives to Help Victimized Taxpayers: 

Statement of James R. White, Director: 
Strategic Issues 

GAO-11-674T: 

GAO Highlights: 

Highlights of GAO-11-674T, testimony before the Subcommittee on Fiscal 
Responsibility and Economic Growth, Committee on Finance, U.S. Senate. 

Why GAO Did This Study: 

Identity theft is a serious and growing problem in the United States. 
Taxpayers are harmed when identity thieves file fraudulent tax 
documents using stolen names and Social Security numbers. In 2010 
alone, the Internal Revenue Service (IRS) Notional Example of Refund 
Fraud identified over 245,000 identity theft incidents that affected 
the tax system. The hundreds of thousands of taxpayers with tax 
problems caused by identity theft represent a small percentage of the 
expected 140 million individual returns filed, but for those affected, 
the problems can be quite serious. 

GAO was asked to describe, among other things, (1) when IRS detects 
identity theft based refund and employment fraud, (2) the steps IRS 
has taken to resolve, detect, and prevent innocent taxpayers' identity 
theft related problems, and (3) constraints that hinder IRS's ability 
to address these issues. 

GAO's testimony is based on its previous work on identity theft. GAO 
updated its analysis by examining data on identity theft cases and 
interviewing IRS officials. 

GAO makes no new recommendations but reports on IRS's efforts to 
address GAO's earlier recommendation that IRS develop performance 
measures and collect data suitable for assessing the effectiveness of 
its identity theft initiatives. IRS agreed with and implemented GAO's 
earlier recommendation. 

What GAO Found: 

Identity theft harms innocent taxpayers through employment and refund 
fraud. In refund fraud, an identity thief uses a taxpayer's name and 
Social Security Number (SSN) to file for a tax refund, which IRS 
discovers after the legitimate taxpayer files. 

Figure: Notional Example of Refund Fraud: 

[Refer to PDF for image: illustration] 

Identity thief steals taxpayer's personal information: 

Fradulent return claiming refund is filed; IRS issues refund. 

Taxpayer: Legitimate return is filed. 

IRS sends notice of duplicate filing. 

Source: GAO. 

[End of figure] 

In employment fraud, an identity thief uses a taxpayer's name and SSN 
to obtain a job. When the thief's employer reports income to IRS, the 
taxpayer appears to have unreported income on his or her return, 
leading to enforcement action. 

IRS has taken multiple steps to resolve, detect, and prevent 
employment and refund fraud: 

Resolve—-IRS marks taxpayer accounts to alert its personnel of a 
taxpayer's identity theft. The purpose is to expedite resolution of 
existing problems and alert personnel to potential future account 
problems. 

Detect—-IRS screens tax returns filed in the names of known refund and 
employment fraud victims. 

Prevent-—IRS provides taxpayers with information to increase their 
awareness of identity theft, including tips for safeguarding personal 
information. IRS has also started providing identity personal 
identification number to help identify legitimate returns. 

IRS's ability to address identity theft issues is constrained by: 

* privacy laws that limit IRS's ability to share identity theft 
information with other agencies; 

* the timing of fraud detection—-more than a year may have passed 
since the original fraud occurred; 

* the resources necessary to pursue the large volume of potential 
criminal refund and employment fraud cases; and; 

* the burden that stricter screening would likely cause taxpayers and 
employers since more legitimate returns would fail such screening. 

View GAO-11-674T or key components. For more information, contact 
James R. White at (202) 512-9110 or whitej@gao.gov. 

[End of section] 

Chairman Nelson, Ranking Member Crapo, and Members of the Subcommittee: 

I am pleased to be here to discuss how identity theft harms taxpayers 
and how the Internal Revenue Service (IRS) works to resolve, detect, 
and prevent these problems. Identity theft is a serious and growing 
problem in the United States. According to the Federal Trade 
Commission (FTC), millions of people have been victims of the crime, 
some of whom may go years without knowing it. Within the tax system, a 
taxpayer may have his or her tax refund delayed if an identity thief 
files a fraudulent tax return seeking a refund using the legitimate 
taxpayer's identifying information. Taxpayers may also become subject 
to IRS enforcement actions after someone else uses the identity theft 
victim's identity to fraudulently obtain employment and the thief's 
income is reported to IRS by an employer in the victim's name. In 2010 
alone, IRS identified over 245,000 identity theft incidents that 
affected the tax system. The hundreds of thousands of taxpayers with 
tax problems caused by identity theft represent a small percentage of 
the expected 140 million individual returns filed, but for those 
affected, the problems can be quite serious. 

My testimony today will cover (1) when IRS detects identity theft-
based refund and employment fraud, (2) the steps IRS has taken to 
resolve, detect, and prevent innocent taxpayers' identity theft-
related problems, (3) constraints that hinder IRS's ability to address 
these issues, and (4) the potential for more rigorous screening to 
prevent refund or employment fraud now and in the future. My testimony 
is based on our previous 2009 and 2011 reports.[Footnote 1] IRS agreed 
with and implemented our recommendation in our 2009 identity theft 
report to develop performance measures and collect data suitable for 
assessing the effectiveness of its identity theft initiatives. We 
updated our analysis with current data on identity theft cases and 
interviewed IRS officials in the Office of Privacy, Information 
Protection and Data Security (PIPDS). To determine the reliability of 
IRS data on identity theft, we talked with agency officials about data 
quality-control procedures, reviewed relevant documentation, and 
tested data for obvious errors. We determined that the data were 
sufficiently reliable for the purposes of this report. 

Our prior reports and this May 2011 update were conducted in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

We discussed the new information in this statement with IRS officials, 
and they concurred with our findings. 

IRS and Taxpayers May Not Discover Refund or Employment Fraud until 
after Legitimate Tax Returns Are Filed: 

The number of tax-related identity theft incidents (primarily refund 
or employment fraud attempts) identified by IRS has grown: 

* 51,702 incidents in 2008, 

* 169,087 incidents in 2009, and, 

* 248,357 incidents in 2010. 

Refund Fraud Delays Innocent Taxpayers' Refunds: 

Refund fraud can stem from identity theft when an identity thief uses 
a legitimate taxpayer's name and Social Security Number (SSN) to file 
a fraudulent tax return seeking a refund. In these cases, the identity 
thief typically files a return claiming a refund early in the filing 
season, before the legitimate taxpayer files. IRS will likely issue 
the refund to the identity thief after determining the name and SSN on 
the tax return appear valid (IRS checks all returns to see if filers' 
names and SSNs match before issuing refunds). IRS often first becomes 
aware of a problem after the legitimate taxpayer files a return. At 
that time, IRS discovers that two returns have been filed using the 
same name and SSN, as shown in figure 1. The legitimate taxpayer's 
refund is delayed while IRS spends time determining who is legitimate. 

Figure 1: Notional Example of Refund Fraud: 

[Refer to PDF for image: illustration] 

Identity thief steals taxpayer's personal information: 

Fradulent return claiming refund is filed; IRS issues refund. 

Taxpayer: Legitimate return is filed. 

IRS sends notice of duplicate filing. 

Source: GAO. 

[End of figure] 

Employment Fraud Exposes Innocent Taxpayers to Enforcement Actions for 
Unreported Income: 

Employment fraud occurs when an identity thief uses a taxpayer's name 
and SSN to obtain a job. IRS subsequently receives income information 
from the identity thief's employer. After the victim files his or her 
tax return, IRS matches income reported by the victim's employer and 
the thief's employer to the tax return filed by the legitimate 
taxpayer, as shown in figure 2. IRS then notifies the taxpayer of 
unreported income because it appears the taxpayer earned more income 
than was reported on the tax return. Employment fraud causes tax 
administration problems because IRS has to sort out what income was 
earned by the legitimate taxpayer and what was earned by the identity 
thief. 

Figure 2: Notional Example of Employment Fraud: 

[Refer to PDF for image: illustration] 

Before tax season: 
Identity thief: 
Identity thief steals personal information from taxpayer and uses name 
and Social Security number when applying for job. 

During tax season: 

Company: 
Income reported is to IRS for identity thief. 

Taxpayer: 
Legitimate tax return is filed with IRS. 

After tax season: 

IRS matches all income reported by employers with income reported by 
taxpayer. 

IRS sends Notice of Underreported Income to Taxpayer. 

Source: GAO. 

[End of figure] 

To Date, Known Cases of Identity Theft Have Occurred outside IRS: 

The name and SSN information used by identity thieves to commit refund 
or employment fraud are typically stolen from sources beyond the 
control of IRS. IRS officials told us they are unaware of any 
incidents where information was stolen from IRS and used to commit 
employment or refund fraud. However, there are risks at IRS. In a 
recent audit, we found that although IRS has made progress in 
correcting previously reported information security weaknesses, it did 
not consistently implement controls intended to prevent, limit, and 
detect unauthorized access to its systems and information, including 
sensitive taxpayer information.[Footnote 2] In 2009, we also reported 
that third-party software used to prepare and file returns may pose 
risks to the security and privacy of taxpayer information.[Footnote 3] 
IRS agreed with our recommendations to address these and other issues. 
We recently followed up with IRS on this issue and learned that IRS 
has begun monitoring adherence to security and privacy standards in 
the tax software industry. 

IRS Has Taken Multiple Steps to Resolve, Detect, and Prevent 
Employment and Refund Fraud : 

In 2004, IRS developed a strategy to address the problem of identity 
theft-related tax administration issues. According to IRS, the 
strategy has evolved and continues to serve as the foundation for all 
of IRS's efforts to provide services to victims of identity theft and 
to reduce the effects of identity theft on tax administration. 

Indicators-—account flags that are visible to all IRS personnel with 
account access—-are a key tool IRS uses to resolve and detect identity 
theft. IRS uses different indicators depending on the circumstances in 
which IRS receives indication of an identity theft-related problem. Once
IRS substantiates any taxpayer-reported information, either through 
IRS processes or the taxpayer providing documentation of the identity 
theft, IRS will place the appropriate indicator on the taxpayer's 
account and will notify the taxpayer. IRS will remove an indicator 
after 3 consecutive years if there are no incidents on the account or 
will remove an indicator sooner if the taxpayer requests it. 

The three elements of IRS's strategy are resolution, detection, and 
prevention. 

Resolution. Identity theft indicators speed resolution by making a 
taxpayer's identity theft problems visible to all IRS personnel with 
account access. Taxpayers benefit because they do not have to 
repeatedly explain their identity theft issues or prove their identity 
to multiple IRS units. Indicators also alert IRS personnel that a 
future account problem may be related to identity theft and help speed 
up the resolution of any such problems. 

Since our 2009 report, IRS developed a new, temporary indicator to 
alert all IRS units that an identity theft incident has been reported 
but not yet resolved. IRS officials told us that they identified a 
need for the new indicator based on their ongoing evaluation of their 
identity theft initiatives. The temporary indicator's purpose is to 
expedite problem resolution and avoid taxpayers having to explain 
their identity theft issues to multiple IRS units. 

As discussed in our 2009 report, taxpayers with known or suspected 
identity theft issues can receive assistance by contacting the 
Identity Protection Specialized Unit.[Footnote 4] The unit operates a 
toll-free number taxpayers can call to receive assistance in resolving 
identity theft issues. 

Detection. IRS also uses its identity theft indicators to screen tax 
returns filed in the names of known refund and employment fraud 
victims. During the 2009, 2010, and 2011 filing seasons, IRS screened 
returns filed in the names of taxpayers with identity theft indicators 
on their accounts. There are approximately 378,000 such taxpayers. In 
this screening, IRS looks for characteristics indicating that the 
return was filed by an identity thief instead of the legitimate 
taxpayer, such as large changes in income or a change of address. If a 
return fails the screening, it is subject to additional IRS manual 
review, including contacting employers to verify that the income 
reported on the tax return was legitimate. In addition to U.S. 
taxpayers with indicators on their accounts, IRS officials also told 
us that they screened returns filed in the name of a large number—
about 350,000—of Puerto Rican citizens who have had their U.S. SSNs 
compromised in a major identity theft scheme.[Footnote 5] 

As of May 12, 2011, 216,000 returns filed in 2011 failed the screens 
and were assigned for manual processing. Of these, IRS has completed 
processing 195,815 and found that 145,537 (74.3 percent) were 
fraudulent. 

In January 2011, IRS launched a pilot program for tax year 2010 
returns (due by April 15, 2011) using a new indicator to "lock" SSNs 
of deceased taxpayers.[Footnote 6] If a locked SSN is included on a 
tax return, the new indicator will prompt IRS to automatically reject 
the return. PIPDS officials told us they intend to expand the pilot to 
include more SSNs of deceased taxpayers after analyzing the results of 
the initial pilot. 

A program IRS uses to identify various forms of refund fraud—-
including refund fraud resulting from identity theft—-is the 
Questionable Refund Program. IRS established this program to screen 
tax returns to identify fraudulent returns, stop the payment of 
fraudulently claimed refunds, and, in some cases, refer fraudulent 
refund schemes to IRS's Criminal Investigation offices. 

Prevention. As described in our 2009 report, IRS has an office 
dedicated to finding and stopping online tax fraud schemes.[Footnote 
7] IRS also provides taxpayers with targeted information to increase 
their awareness of identity theft, tips and suggestions for 
safeguarding taxpayers' personal information, and information to help 
them better understand tax administration issues related to identity 
theft. Appendix I summarizes information IRS and FTC provide to 
taxpayers to protect themselves against identity theft. 

Since our 2009 report, IRS began a pilot program providing some 
identity theft victims with a 6-digit Identity Protection Personal 
Identification Number (PIN) to place on their tax return.[Footnote 8] 
IRS officials told us they created the PIN based on their ongoing 
evaluation of their identity theft initiatives. When screening future 
years' returns for possible identity theft, IRS will exclude returns 
with a PIN, which will help avoid the possibility of a "false 
positive" and a delayed tax refund. IRS sent letters containing an 
identity theft PIN to 56,000 taxpayers in the 2011 filing season. IRS 
will provide taxpayers a new PIN each year for a period of 3 years 
following an identity theft. 

IRS's Ability to Address Identity Theft Issues Is Constrained by Law, 
Timing, and Resources: 

Privacy and Other Laws Limit IRS's Coordination with Other Agencies 
and Taxpayers: 

IRS's initiatives to address identity theft are limited in part 
because tax returns and other information submitted to and, in some 
cases generated by, IRS are confidential and protected from 
disclosure, except as specifically authorized by statute.[Footnote 9] 
As discussed in more detail in our 2009 report, IRS can disclose 
identity theft-related events that occur on a taxpayer's account to 
the taxpayer, such as the fact that an unauthorized return was filed 
using the taxpayer's information or that the taxpayer's SSN was used 
on another return. However, IRS cannot disclose to the taxpayer any 
other information pertaining to employment or refund fraud, such as 
the perpetrator's identity or any information about the perpetrator's 
employer. Additionally, IRS has limited authorities to share identity 
theft information with other federal agencies. When performing a 
criminal investigation, IRS can make only investigative disclosures, 
that is, the sharing of specific, limited information necessary for 
receiving information from other federal agencies that might support 
or further IRS's investigation. Disclosure of taxpayer information to 
state and local law enforcement agencies is even more limited. 

IRS Is Often Unable to Detect Suspicious Cases until after the Fraud 
Has Occurred Because of the timing of tax return filing, IRS is often 
unable to detect suspicious cases until well after the fraud occurred. 
Validating the identity theft and substantiating the victim's identity 
takes further time. For example, IRS may not be able to detect 
employment fraud until after the following year's tax filing deadline 
of April 15 when it matches income reported by employers against 
taxpayers' filed returns. It is only after IRS notifies a taxpayer of 
unreported income that IRS may learn from the taxpayer that the income 
was not the taxpayer's and that someone else must have been using his 
or her identity. By the time both the victim and IRS determine that an 
identity theft incident occurred, well over a year may have passed 
since the employment fraud. 

IRS Does Not Pursue Criminal Investigations in Every Case of Potential 
Refund and Employment Fraud because of Resource Priorities: 

IRS officials told us that IRS pursues criminal investigations of 
suspected identity thieves in only a small number of cases. IRS's 
Criminal Investigations (CI) Division's investigative priorities 
include tax crimes, such as underreporting income from legal sources; 
illegal source financial crimes; narcotics-related financial crimes; 
and counterterrorism financing. In fiscal year 2010, CI initiated 
4,706 investigations of all types, a number far smaller than the total 
number of identity theft-related refund and employment fraud cases 
identified in that year. 

Also, the decision to prosecute identity thieves does not rest with 
IRS. CI conducts investigations and refers cases to the Department of 
Justice (DOJ), which is responsible for prosecuting cases in the 
federal courts. IRS officials said that the small number of tax-
related identity theft cases that they investigate recognizes that DOJ 
has to conclude that the case is of sufficient severity that it should 
be pursued in the federal courts before it will be prosecuted. 
According to data from CI included in our prior report, the median 
amount of suspected identity theft-related refunds identified in the 
2009 filing season was around $3,400. 

CI has investigated tax-related identity theft cases that DOJ has 
successfully prosecuted. In our prior report we cited the example of a 
former Girl Scout troop leader serving 10 years in federal prison for 
stealing the SSNs of girls in her troop and then claiming more than 
$87,000 in fraudulent tax refunds. 

Improved Detection of Employment and Refund Fraud Must Be Balanced 
against Burdens on Innocent Taxpayers and Costs. 

Options exist, now and in the future, to improve detection of identity 
theft-related tax fraud, but they come with trade-offs. 

Known identity theft victims. IRS could screen returns filed in the 
names of known identity theft victims more tightly than is currently 
done. More restrictive screening may detect more cases of refund fraud 
before IRS issues refunds. However, more restrictive screening will 
likely increase the number of legitimate returns that fail the 
screenings (false positives). Since returns that fail screening 
require a manual review, this change could harm innocent taxpayers by 
causing delays in their refunds. Using more restrictive rules would 
also place additional burden on employers because IRS contacts 
employers listed on all returns that fail screening. 

All taxpayers. Beyond screening returns with known tax-related 
identity theft issues, screening all tax returns for possible refund 
fraud would pose similar trade-offs, but on a grander scale. For 
example, as noted above, one way to check for identity theft is to 
look for significant differences between current year and prior year 
tax returns, but this could be confounded by a large number of false 
positives. IRS officials told us that in 2009 there were 10 million 
address changes, 46 million changes in employer, and millions of 
deaths and births. Checking all returns that reflect these changes for 
possible refund fraud could overwhelm IRS's capacity to issue refunds 
to legitimate taxpayers in a timely manner. 

Looking Forward. IRS's identity protection strategy and the creation 
of PIPDS were part of an effort to more efficiently identify refund 
and employment fraud as well as to assist innocent taxpayers. Since 
adopting the recommendation in our 2009 report regarding using 
performance measures to assess effectiveness,[Footnote 10] IRS has 
followed through, using its improved performance information to 
identify additional steps it could take. These include the new 
indicators for taxpayer accounts, improved routing of suspect returns, 
and PIN numbers. However, none of these steps will completely 
eliminate refund or employment fraud. By continuing to monitor the 
effectiveness of its identity theft initiatives, IRS may find 
additional steps to reduce the problems faced by both taxpayers and 
IRS. 

Looking further forward, other long-term initiatives underway at IRS 
have at least some potential to help combat identity theft-related 
fraud. In April 2011, the Commissioner of Internal Revenue gave a 
speech about a longterm vision to increase up-front compliance 
activities during returns processing. One example is to match 
information returns with tax returns before refunds are issued. Before 
this could happen, IRS would have to make significant changes. Third-
party information returns would have to be filed with IRS earlier in 
the filing season.[Footnote 11] IRS would also have to improve its 
automated processing systems; IRS's current Customer Account Data 
Engine (CADE 2) effort is one key step.[Footnote 12] While these 
efforts are part of a broad compliance improvement vision, they could 
also detect some identity theft-related fraud. If, for example, IRS 
could match employer information to tax returns before refunds are 
issued, identity thieves could not use phony W-2s to claim fraudulent 
refunds. 

Chairman Nelson, Ranking Member Crapo, and Members of the 
Subcommittee, this completes my prepared statement. I would be happy 
to respond to any questions you may have at this time. 

Contacts and Acknowledgments: 

For further information on this testimony, please contact James R. 
White at (202) 512-9110 or whitej@gao.gov. In addition, contact points 
for our Offices of Congressional Relations and Public Affairs may be 
found on the last page of this statement. In addition to the 
individual named above, David Lewis, Assistant Director; Shannon 
Finnegan, analyst-in-charge; Michele Fejfar; Donna Miller; Erika 
Navarro; Melanie Papasian; and Sabrina Streagle made key contributions 
to this report. 

[End of section] 

Appendix I: Things Taxpayers Can Do to Protect Themselves if They 
Suspect Identity Theft: 

Both the Internal Revenue Service (IRS) and the Federal Trade 
Commission (FTC) provide helpful information to taxpayers to deter, 
detect, and defend against identity theft. IRS provides taxpayers with 
targeted information to increase their awareness of identity theft, 
tips and suggestions for safeguarding taxpayers' personal information, 
and information to help them better understand tax administration 
issues related to identity theft. For example, IRS has published on 
its website the list in table 1 below. 

Table 1: IRS's Top 10 Things Every Taxpayer Should Know about Identity 
Theft: 

1. The IRS does not initiate contact with a taxpayer by e-mail. 

2. If you receive a scam e-mail claiming to be from the IRS, forward 
it to the IRS at phishing CO irs.gov. 

3. Identity thieves get your personal information by many different 
means, including: 

* Stealing your wallet or purse; 

* Posing as someone who needs information about you through a phone 
call or e-mail; 

* Looking through your trash for personal information; 

* Accessing information you provide to an unsecured Internet site. 

4. If you discover a website that claims to be the IRS but does not 
begin with `www.irs.gov', forward that link to the IRS at [hyperlink, 
http://www.phishing@irs.gov]. 

5. To learn how to identify a secure website, visit the Federal Trade 
Commission at [hyperlink, http://www.onguardonline.gov/tools/recognize-
secure-site-using-ssl.aspx]. 

6. If your Social Security number is stolen, another individual may 
use it to get a job. That person's employer may report income earned 
by them to the IRS using your Social Security number, thus making it 
appear that you did not report all of your income on your tax return. 
7. Your identity may have been stolen if a letter from the IRS 
indicates more than one tax return was filed for you or the letter 
states you received wages from an employer you don't know. If you 
receive such a letter from the IRS, leading you to believe your 
identity has been stolen, respond immediately to the name, address or 
phone number on the IRS notice. 

8. If your tax records are not currently affected by identity theft, 
but you believe you may be at risk due to a lost wallet, questionable 
credit card activity, or credit report, you need to provide the IRS 
with proof of your identity. You should submit a copy of your valid 
government-issued identification — such as a Social Security card, 
driver's license, or passport — along with a copy of a police report 
and/or a completed Form 14039, Identity Theft Affidavit. As an option, 
you can also contact the IRS Identity Protection Specialized Unit, 
toll-free at 800-908-4490. You should also follow FTC guidance for 
reporting identity theft at [hyperlink, http://www.ftc.gov/idtheft]. 

9. Show your Social Security card to your employer when you start a 
job or to your financial institution for tax reporting purposes. Do 
not routinely carry your card or other documents that display your 
Social Security number. 

10. For more information about identity theft — including information 
about how to report identity theft, phishing and related fraudulent 
activity — visit the IRS Identity Theft and Your Tax Records Page, 
which you can find by searching "Identity Theft" on the IRS.gov home 
page. 

Source: IRS. 

[End of table] 

The FTC operates a call center for identity theft victims where 
counselors tell consumers how to protect themselves from identity 
theft and what to do if their identity has been stolen (1-877-IDTHEFT 
[1-877-438-4338]; TDD: 1-866-653-4261; or www.ftc.gov/idtheft). The 
FTC also produces publications on identity theft, including Take 
Charge: Fighting Back Against Identity Theft.[Footnote 13] This 
brochure provides identity theft victims information on: 

1. immediate steps they can take, such as placing fraud alerts on 
their credit reports; closing accounts; filing a police report; and 
filing a complaint with the FTC; 

2. their legal rights; 

3. how to handle specific problems they may encounter when clearing 
their name, including disputing fraudulent charges on their credit 
card accounts; and; 

4. minimizing recurrences of identity theft. 

[End of section] 

Footnotes: 

[1] GAO, Tax Administration: IRS Has Implemented Initiatives to 
Prevent, Detect, and Resolve Identity Theft-Related Problems, but 
Needs to Assess Their Effectiveness, [hyperlink, 
http://www.gao.gov/products/GAO-09-882] (Washington, D.C.: Sept. 8, 
2009) and Taxpayer Account Strategy: IRS Should Finish Defining 
Benefits and Improve Cost Estimates, [hyperlink, 
http://www.gao.gov/products/GAO-11-168] (Washington, D.C.: Mar. 24, 
2011). 

[2] GAO, Information Security: IRS Needs to Enhance Internal Control 
over Financial Reporting and Taxpayer Data, [hyperlink, 
http://www.gao.gov/products/GAO-11-308] (Washington, D.C.: Mar. 15, 
2011). We made recommendations for corrective action, and IRS agreed 
to develop a detailed corrective action plan to address each 
recommendation. 

[3] GAO, Tax Administration: Many Taxpayers Rely on Tax Software and 
IRS Needs to Assess Associated Risks, [hyperlink, 
http://www.gao.gov/products/GAO-09-297], (Washington, D.C.: Feb. 25, 
2009). 

[4] [hyperlink, http://www.gao.gov/products/GA0-09-882]. 

[5] The number of accounts with indicators is not the same as the 
number of returns that are screened. A single taxpayer account, for 
example could be subject to many refund fraud attempts. 

[6] The pilot consists of 6,000 deceased taxpayers who died before 
2009, but filed returns in 2009. IRS selected these taxpayers for the 
pilot because of the high probability the taxpayers' returns were 
fraudulent. 

[7] [hyperlink, http://www.gao.gov/products/GA0-09-882]. 

[8] [hyperlink, http://www.gao.gov/products/GA0-09-882]. 

[9] Section 6103 of Internal Revenue Code. 

[10] [hyperlink, http://www.gao.gov/products/GA0-09-882]. 

[11] Many information returns, such as forms W-2 filed by employers, 
are not due to the government until the end of February. 

[12] [hyperlink, http://www.gao.gov/products/GA0-11-168]. 

[13] Federal Trade Commission, Take Charge: Fighting Back Against 
Identity Theft (Washington, D.C., February 2006). This brochure is 
available at [hyperlink, 
http://www.ftc.gov/bcp/edu/pubs/consumer/idtheft/idt04.htm] (accessed 
May 11, 2011). 

[End of section] 

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Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]: 
E-mail: fraudnet@gao.gov: 
Automated answering system: (800) 424-5454 or (202) 512-7470: 

Congressional Relations: 

Ralph Dawn, Managing Director, dawnr@gao.gov: 
(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, D.C. 20548: 

Public Affairs: 

Chuck Young, Managing Director, youngc1@gao.gov: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: