Imagine being a parent, raising a family, taking your kids to school, making their breakfast, tucking them into bed at night and basically doing all of the everyday kinds of things that parents do for their children. Then you go to file your tax return and you are notified by the IRS that someone else has already claimed your children on their taxes. How can this happen?UPDATE: Effective January 1, 2016 The IRS will now require Identity Theft protection PINs for dependent children who have been victims of identity theft. Thank you!
I had always thought that cases like this were caused by divorced parents behaving badly, and to be quite honest many times that’s exactly what it is. But after I did a post about what you should do if someone else claims your child, I started receiving numerous posts, e-mails and phone calls about how for some people, this happens to them year after year after year.
One form of recourse the IRS has is to ban a person from claiming the Earned Income Tax Credit for three to eleven years if the person fraudulently claimed a child on a tax return. You would think that would solve the problem–except, as I’ve since discovered, it does nothing to stop true fraud. Although the original guilty party may not be able to file an EIC claim at all–it doesn’t prevent him or her from selling the child’s social security number on the black market to be used for fraudulent tax returns.
So who’s harmed by this fraud? Well obviously, the parents of the children who’s identities are stolen, and the children themselves. But also you! According to the IRS, there is approximately $12 to $14 billion dollars of EIC Tax fraud every year. $14 billion that’s coming out of your taxpaying pocket.
We’re talking about some serious fraud here.
In a normal case, the wrong parent claims a child, IRS notices go out, the issue is settled and the offending parent pays back the taxes while the rightful parent claim gets paid his or her refund. While the system isn’t perfect, in theory it’s all good.
With a stolen child identity case, it’s genuine fraud. The criminal steals the ID, creates a fake tax return–often under a fake identity, uses the child’s very real social security number to receive refundable tax credits, and then disappears off the radar before the IRS can catch him (or her.) The IRS has to pay the real parent his tax refund–because it’s the rightful claim, but the money that went to the criminal is lost forever.
As an adult, if your identity is stolen and used in a phony tax scam, you can receive a PIN number to protect you for future tax filing. Currently, there is no such protection for children. And child IDs are extremely valuable to fraudsters–with a single child being worth thousands of dollars in federal refundable tax credits.
What can you do? Please sign my petition to the Obama Administration to create a child identity theft protection PIN number for victims of child identity theft. Basically I’m asking that anyone who has successfully defended a rightful claim for having their children on their tax return for two years in a row to be awarded a PIN number to be used in association with their child’s social security number in order to prevent fraudulent returns from being filed.
You can access the petition by clicking on this link: White House petition (Update, I removed the link and petition 10/10/2015, we got what we wanted.)
Why defend for two years instead of only once? Divorced families often have conflicts over claiming a child and it’s fairly common to have an issue once in awhile. Issuing a PIN after just one claim could wind up muddying the system worse than before. If a family has defended the claim twice in a row– that’s a clearer indication of fraud and the need for protection is much more defined.
What happens if custody changes and the rightful parent is not the one with the PIN number? If the parent with the PIN number doesn’t turn over the PIN along with the child’s custody, the new custodial parent will wind up paper filing their tax return and going through the same process of claiming their child as what happens currently. The purpose of the PIN is to stop fraud, not completely end parental rights. Please sign the petition today, and help stop child identity theft.
See also: My Ex Claimed My Kid, Now What Do I Do? http://robergtaxsolutions.com/2011/01/my-ex-claimed-my-kid-now-what-do-i-do/
Hi April,
It’s almost impossible. The best advice I can give is that you file your return as early as possible. And if they have already been claimed, then mail your return in and claim them. If the other people claiming your kids are strangers, and it’s a true case of identity theft, the IRS will issue an Identity theft protection PIN. But, if it’s their father, or someone who may have had a legal right to claim them at one time – you’re probably not going to get any help from the IRS on that. Sorry. As one IRS agent told me, “They don’t want to get involved in family matters.”
Im trying to see how to put a block on my kids social security number to stop people for filling my kids
I just posted this blog and in today’s Twitter feed I received this news story coming out of Tampa Bay: http://www2.tbo.com/news/news/2012/may/09/irs-fails-tax-fraud-victims-report-says-ar-401519/
The fraud is a very real, very serious problem.