updated 6/2/2011 6:44:31 PM ET 2011-06-02T22:44:31

The IRS commissioner publicly apologized Thursday to three victims of identity theft who said agency employees were rude or insensitive to them and added to their emotional stress.

Commissioner Douglas Shulman began his testimony before a House committee with the apology, saying he met with the victims privately and accepted their accounts of conversations with agency employees who were supposed to help them. The victims testified after Shulman's apology, but had met with him beforehand.

"We need to walk in each taxpayer's shoes," Shulman said. He promised to retrain employees who may encounter emotionally distraught taxpayers, whose names and Social Security numbers were stolen by thieves who filed for their refunds.

"We obviously need to do better," Shulman told a House Oversight and Government Reform subcommittee.

Tax returns filed by identity thieves have increased nearly five-fold between 2008 and 2010, from 51,702 incidents to 248,357, according to the Government Accountability Office.

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Shulman said the IRS flags a fraudulent return once it's discovered, and gives extra scrutiny to any subsequent returns filed under the same Social Security number. He said the agency's best chance for prevention is a new personal identification number that will be assigned to victims. The IRS would then know the return using the PIN is legitimate, and a return filed without it is likely a fraud.

Currently, identity theft victims may wait more than a year for their refunds while the IRS sorts out the legitimacy of two returns with the same Social Security number.

The three victims all complained about their conversations with IRS employees.

Sharon Hawa, of the Bronx section of New York City, said thieves twice filed fraudulent returns and received her refunds.

She obtained a police report, filed a report with the Federal Trade Commission, mailed in a hard copy of her electronically filed return and called the IRS to verify that the return was received.

She was referred to a specialized unit and was told to submit the paperwork to a different address. She said she followed up with numerous calls to the IRS, having to explain the situation over and over, and verify her identity again to each employee.

It took 14 months to receive a $6,604 refund that she had counted on to pay bills.

"I had to take on a second job to support myself," she said.

At one point, Hawa said she was assigned a taxpayer advocate "who was incredibly rude and difficult to reach, which only added to the stress and frustration of the entire situation." She said the advocate asked yet again for the same paperwork already sent to the IRS multiple times.

Lori Petraco of York, Pa., said her nightmare began in March when the Post Office sent her an envelope stamped "return to sender ... unable to forward." Inside was an IRS change of address form with her Social Security number, her name and an address where she never lived.

When she went to her local IRS office, the clerk blurted out to a waiting room full of taxpayers, "Your identity has been stolen."

The clerk then asked Petraco, in a voice that everyone could hear, to recite her Social Security number.

"I went out to my car and cried," Petraco said. "I was very overwhelmed."

LaVonda Rae Thompson, also of York, Pa., said that when she learned this year of her stolen identity, she called the IRS and "spoke with the most rude and discourteous person I have ever spoken with in my life.

"When I asked her about my case, she proceeded to yell and scream at me. When I asked for her name and ID number again ... the phone went silent. She hung up the telephone."

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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