medical practice fraudPhysicians are not normally the segment of the population that comes to mind when one thinks of filing fraudulent tax returns. During this year’s tax season that culminates on October 15, 2014 for those who filed for extensions for turning in their tax returns, some physicians in Texas are realizing that they are in the midst of a scheme. Filers of bogus tax returns aim to defraud the federal government out of millions of dollars. Since June, physicians in Texas affected by this ordeal number over 100. Reports in Texas mirror others filed by medical societies in other states.

The Culprit Uncovered?

While no one theory has been proven as the reason for this spike in fraudulently filed tax returns, some security experts think it can be traced to a breach in data security. Brian Krebs, a former Washington Post reporter who writes extensively on security issues, thinks the problem might be traceable to a national organization that either certifies physicians or provides credentials for them.
Krebs notes that thieves who specialize in this type of fraud either purchase or steal social security numbers before electronically filing tax returns with sizable refunds. These refunds are funneled into a bank account that utilizes a prepaid debit card. Once the deposit hits, the individual simply withdraws the desired amount from an ATM.

Another Possible Cause

Other experts think this latest tax return scheme is related to information that the Centers for Medicare & Medicaid Services (CMS) recently released. In April, CMS released data that identified physicians – both by name and location – who received the most money from the agency. This information could potentially give schemers the ammunition they need to file bogus tax returns and collect hefty refunds on behalf of unsuspecting physicians.

How Physicians Can Protect Themselves

Physicians who have been affected by this fraudulent scheme can take steps to protect themselves. The first step is to file a paper tax return and attach a completed Form 14039 Identity Theft Affidavit to it. Send in any letters received from the IRS about the issue, including the 5071C letter if received. If a physician has not yet received such notification, but believes their information has been compromised, they should contact the agency’s Identity Protection Specialization Unit.
For those cases in which a physician believes their social security information has been compromised, contacting and filing a complaint with the Federal Trade Commission (FTC), the US Department of Justice, their local police department and the Social Security Administration is highly recommended.

Protection for the Future

Even though physicians are not responsible in cases such as these, the aftermath can take away valuable time while adding considerable stress to one’s life. Be vigilant and methodical about your billing practices so that you can produce necessary financial information when needed.

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Last Updated on September 22, 2014