Early tax filers wait for refunds as the IRS fights ID theft

If you filed your taxes earlier this year and you're sitting around waiting for your refund, you may find you have to wait a bit longer for a very legitimate reason.

During the last few years, crooks have been stealing people's Social Security numbers and then filing false returns as though they were those people. The crooks typically claim low income and high deductions and file electronically. Then when you go to legitimately file your return, it's rejected by the IRS because somebody else already filed as you!

The whole mess typically takes about 10-14 months to straighten out if you're on the receiving end of the scam. For that reason, I've advised callers to make sure they owe the IRS rather than the other way around. That way you're not waiting around for money you can't get your hands on.

Fortunately, the IRS has been cracking down on ID thieves and has arrested hundreds of people in roughly half of all states. That's why the refunds have been delayed.

Last year, the IRS was able to short circuit $1.5 billion in false tax return money that was about to flow into criminals' hands. But that's just the tip of the iceberg and represents only the initial paper trails that the IRS was able to follow. That tells you how big of a problem this is.

If the IRS crackdown means the refunds are delayed a few weeks to make sure only you as a legitimate taxpayer get it, I think that delay is worth it.