Your Identity Was Stolen, But You Don't Know It. The IRS Does, But They Ain't Talking. A New Law May Change That.

Imagine your surprise.

You get a phone call from a collection agent. He's collecting on a debt that you know nothing about. After some digging, you discover that someone else is using your personal information to run up charges in your name -- you're a victim of identity theft! 

Surprise!

Of course, being a good citizen, you inform the Internal Revenue Service. 

But you didn't need to tell the IRS. They already knew. And knew for some time. They just never tell anyone.

Bigger surprise!

A scenario similar to this actually happened to a man in Princeton, WI. How? Because under current rules, IRS agent are not allowed to disclose information of suspected identity theft.  An agent can lose his job - or worse - if she does. 

To the rescue come U.S. Representatives Tom Petri of Wisconsin and Melissa Bean of Illinois.  In a rare showing of bipartisanship (Petri's a Republican; Bean's a Democrat), they have sponsored H.R.5972, the Social Security Identity Defense Act of 2010. 

U.S. Rep. Melissa Bean (D-IL-08), co-sponsor of H.R. 5972.

If made into law, this act will require the IRS to notify a taxpayer if the IRS suspects that the taxpayer's identity has been pilfered.  The IRS will also be allowed to provide limited information regarding the suspected identity theft to the FBI.

Laws and rules to protect privacy are vital, especially when a government agency like the IRS is involved.  But when tailored intelligently, exceptions can be made that can protect taxpayers from various criminals, especially fraudsters and identity thieves.

Professor Fraud will stay on top of this legislation as it progresses through Congress.