When Donna and James Miller tried to file their income tax return earlier this year, they learned they were part of a growing number of taxpayers whose identities were stolen for tax fraud.
Someone had already used Donna Miller's Social Security number to file a tax return — presumably to obtain a fraudulent refund — so their real return was blocked.
And like countless other victims, the Millers were about to get firsthand experience with the IRS' inability to deal with identity theft victims.
The federal tax agency's treatment of identity theft victims was in the spotlight again Wednesday with the release of another critical watchdog report that said the IRS destroyed thousands of forms filled out by victims without telling victims what happened.
"Man, it's hard to get in touch" with the IRS, said James Miller, who works as an engineer for Hillsborough County. "We got bounced around, bounced around."
Donna Miller, a preschool teacher, said that every time she called the IRS she got a different person. Then, on July 29, someone at the IRS told her to fill out a form 3949-A, also known as an information referral, which is used to report suspected tax fraud activity. She filled out the form and sent it in the next day.
She hasn't heard anything since.
Turns out, according to an inspector general's report released Wednesday, Donna Miller filled out the wrong form.
The forms are not designed for identity theft victims, and the agency doesn't have a way to handle forms with their information, according to the watchdog report. The inspector general estimated about 3,000 forms 3949-A from identity theft victims were "destroyed due to a lack of procedures on how to process these claims. Victims were not notified."
The Treasury Inspector General for Tax Administration concluded that, "Reporting guidelines provided to taxpayers and employees are confusing and inconsistent."
The report said some identity theft victims are wrongly told by IRS employees to complete and submit form 3849-A, while others mistakenly submit the form because directions on the agency's website are unclear.
Congresswoman Kathy Castor, D-Tampa, said she is "very concerned" about the inspector general's findings. She said her office has helped "hundreds" of constituents who were ID theft victims to navigate the IRS and get their refunds more quickly.
"The best advice right now is for folks to get that congressional referral until the IRS can straighten this out," Castor said, "and people can have confidence that when they file the report that the IRS directs them to file that it's not going to be thrown in the trash."
The inspector general said that until the agency was alerted to the problem in April, IRS employees at local taxpayer assistance centers used internal guidelines and told identity theft victims to use the form. The inspector general's report says that on April 25, IRS management alerted employees in the assistance centers to the issue.
The report says IRS employees now correctly tell identity theft victims to complete Identity Theft Affidavits.
But Donna Miller says she was told to use the form more than three months after the problem supposedly was fixed.
The latest inspector general report comes on the heels of an audit released in August by the inspector general concluding that the IRS last year failed to detect more than $5.2 billion in tax refund fraud nationwide. In the Tampa area alone, thieves stole more than $400 million from federal taxpayers.
And in May, the inspector general released another report criticizing the IRS for how it handles identity theft victims, forcing them through a Byzantine system of unreturned phone calls, conflicting regulations and untrained Internal Revenue Service employees providing incorrect information.
The number of identity theft cases in the IRS has grown significantly over the last few years, "overwhelming IRS resources and burdening taxpayers," that report said. "Communications between the IRS and victims are limited and confusing."
The May report also noted that Florida has the highest per-capita rate of reported identity theft complaints, followed by Georgia and California.
Donna Miller and James Miller are still waiting for their $1,800 tax refund. The IRS "won't tell us anything," he said. "We're left hanging."