Physicians Targeted in Fraudulent Tax Return Scam

Medical societies are reporting that physicians who are waiting until October 15, 2014 to file their 2013 tax returns are being targeted at higher-than-normal rates of a tax fraud scheme involving phony tax returns.

In June the Texas Medical Association reported that more than 100 of their members notified the association someone had stolen their Social Security numbers and attempted to claim their tax refunds. Victims also include physician assistants, advanced practice registered nurses, dentists, podiatrists, and pharmacists. According to the medical societies of North Carolina, New Hampshire, Vermont, Connecticut, and Michigan, more than 100 health care professionals in each state were victims of this year’s tax refund fraud scheme.

The scam involves someone other than the physician filing tax returns using his or her Social Security number.

Data Security Breach?

Brian Krebs, former Washington Post reporter and author of KrebsOnSecurity.com, reports that the data breach could have occurred at a national organization that certifies or provides credentials to physicians. He notes the scheme comes on the heels of the Centers for Medicare & Medicaid Services’ (CMS’) release of payment information for 880, 000 health care professionals nationwide.

The release included the national provider identifier (NPI) number of each physician. However, Krebs points out, NPI numbers have long been available through CMS, and the payment information CMS made public did not include physicians’ Social Security numbers.

Fraudulent Tax Returns

Krebs added that the thieves steal or purchase Social Security numbers and other data on consumers, and then electronically file fraudulent tax returns claiming a large refund. The thieves instruct the IRS to send the refund to a bank account that is tied to a prepaid debit card, which the fraudster can then use to withdraw cash at an ATM. The fraudulent returns took place shortly after the April 15, 2014 tax deadline and the thieves beat physicians to the IRS with returns. The IRS then rejected returns submitted at the later date by the physician.

Take Precautions

Even if you haven’t been victimized, the Secret Service recommends all physicians visit www.experian.com/fraud and place yourself on a 90-day credit fraud alert. This could potentially slow or halt further attempted identity theft activities. While not every physician is at risk of identity theft, this is a suggested precautionary measure.

The American Medical Association offers suggestions for physicians affected by the scam:

• File a paper return, and attach a Form 14039 Identity Theft Affidavit to explain what happened.

• Attach copies of the 5071C letter and any other notices from the IRS to your tax return. If you have not received notice from the IRS, but believe your personal information may have been used fraudulently; call the IRS Identity Protection Specialized Unit at (800) 908-4490.

The North Carolina Medical Society (NCMS) suggests contacting the following agencies if you learn your Social Security number has been used fraudulently:

• File a complaint with the Federal Trade Commission (FTC) on its website.

• File a local police report.

• Call the Social Security Administration’s (SSA’s) fraud hotline at (800) 269-0271 to report fraudulent use of your Social Security number or use the SSA website.

• Consult the U.S. Department of Justice website for additional information on fraud and identity theft.

The IRS is required to bear the loss of fraudulent returns. Physicians are urged to file their returns early next year and beat the thieves to the punch.