Tax Scam Includes State Returns

*This article is an original work of the ISMA and was released as an ISMA Special Alert on April 8, 2014.

Here are the details and what you need to do

Based on reports from physicians and accountants, the ISMA has previously issued several alerts about physician identity theft and tax fraud at the federal level. The ISMA has now learned the Indiana Department of Revenue (DOR) has been investigating identity theft and tax return scams at the state level as well. The DOR confirmed the scam impacts various health professionals, including physicians, nurses, dentists and oral surgeons, and noted a proliferation of such cases since March.

“The Department has been catching and stopping hundreds of the fraudulent claims and saving millions of dollars,” said Bob Dittmer, DOR 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 DOR 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 DOR investigation unit.

Reed also confirmed through the DOR that physicians from outside of Indiana have been affected by this. More specifically, the DOR has identified cases in which the identities of physicians located outside Indiana have been used to file fraudulent Indiana tax returns.

Physicians who have been defrauded at the state level will need to file a paper return—and are advised to do so as quickly as possible. Also, physicians who have determined that they are victims of tax fraud should notify DOR by calling (317) 232-2240. There is no complaint form to fill out, but your call will be routed properly to the investigation unit. Your state tax refund may be delayed, but only by a few weeks, according to the DOR.

If you have been victimized by this, contact your accountant immediately. They may be able to execute an IRS and State Department of Revenue Power of Attorney form, which allows them to discuss your situation with the taxing authorities on your behalf.

“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.”

You can learn more about identity theft or file a complaint by visiting here.

The ISMA has offered to assist the DOR and the Office of the Indiana Attorney General in any way possible