Nightly News   |  March 31, 2013

Identity theft on the rise

One of the fastest growing crimes in this country involves stealing people's social security numbers to file fake tax returns. NBC's Kate Snow reports.

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>>> with this year's tax deadline two weeks away, we are back with an alarming new trend. one of the fastest growing crimes in this country involves stealing people's identities, their social security numbers to file fake tax returns with the irs . it's happened almost a million times in the last year alone. here's nbc's kate snow with more tonight.

>> reporter: sheila had no idea someone had stolen her identity until her accountant tried to file her 2009 tax return online.

>> he calls and said there's a problem. it got kicked out.

>> reporter: what do you mean it got kicked out?

>> well, something came up on the screen that said we'd already filed.

>> you had filed?

>> no, we had not. i said you need to contact irs right away.

>> reporter: that's when she says her nightmare began.

>> frustrating, scary. aggravating and time consuming. lot of calls, lot of letters, lot of forms.

>> reporter: a thief stole her name, date of birth and social security number , then electronically filed a fake return with the irs and received a refund. meantime, she had to fight for months to prove she was the real taxpayer and deserved her own very real $5,700 refund.

>> east tell pa here is a hire crime rate , lot of drugs, lot of guns.

>> reporter: this detective says the crime is so easy and so lucrative, criminals in tampa are doing it instead of selling drugs.

>> i had a drug trafficking tell me i can go out there and sell a kilo or two of cocaine, hopefully make $5,000, $10,000. i can submit ten tax returns a day. i've made myself $40,000, $50,000. he goes and i can watch cartoons while i'm doing it. no suppress.

>> reporter: until recently, arrests and prosecutions were rare but the irs says that's changing.

>> we stopped $20 billion from going out the door last filing season and we're constantly balancing how do we make sure we get the legitimate taxpayer their refund as quickly as possible without causing them undue burden, but at the same time stopping the bad returns.

>> reporter: but sheila is not impressed. a crook filed as her not once, but twice.

>> it is a life changing experience. that's the only reason i'm doing this interview, is because it is a horrible crime and it's not being handled well.

>> reporter: this year she got her refund, but every year she worries she might be hit again. kate snow , nbc news, ft. lauderdale.