N.A.T. Steals Tax Forms, Loses 6k To Pay Off RHUer's Loans. Might This Cause Trouble For Perky?

From: Perky

So few days ago my co-worker shared a story of a NAT getting what they deserved, and I thought you guys would like to hear it; and maybe you could also offer a few words of advice.

A little background about my co-worker. About 7 years ago she was in her 3 year of college, using grants and student loans, when she had a very difficult pregnancy and withdrew mid semester. Since then she has not gone back to college. Since she withdrew and did not complete her degree, she has to not only pay back the loans, but the grants as well --and she says she has not been able to put her loans/grant into deferment because of this. She says she tries to pay back what she can when she can; but she is overdue to the tune of 10k. But with a part-time retail job, it is slow going.

Now last year she moved to a new house, and while she updated her address with our place of employment, for some reason her W2s were sent to her old address. She was able to get a copy of her W2s and her and her husband just filed. Now they file jointly, but with a "injured spouse." This is not a physical injured spouse, but a financially injured spouse--basically it means that the government can only take her part of the tax return to pay for her student loans; but leaves her husband's part of the tax return alone.

Her share of the tax return is usually about $1000, and his share is about 4k (he is the full time worker). Well a few week after they filed they get a notice back from the IRS saying that her W2 had already been filed!!! Yep, whoever was at her old place got her W2 and decided to file it and filed it jointly. And that tax return went to pay her over-due student loan to the tune of 6k!

Apparently who ever was at her old house used her W2 and filed jointly as well, hoping to up their tax return. But not knowing about her loans they did not file "injured spouse" and therefore did not get back a single dime!!! and over half of her loans are now paid off. :) Now that is poetic justice!

I wish I could have been there when that NAT found out they were not getting back anything. What were they going to do? Admit they committed tax fraud to the IRS?

And that brings me to asking for advice. My co-worker does not want to do anything about this; and just let her husband file without her W2, they will still get back about 3k to 4k. But I am worried that if she does not bring this to the attention of the of IRS, she could face criminal charges if it is ever found out.

She is worried that if she lets the IRS know they will reverse the 6k that went towards her student loans and she is just so happy thinking that all she has to pay is now 4k rather than the 10k. But I think the consequence of not telling the IRS know would be worse than owing 10k.

So is there anyone familiar with tax laws and situations like this? Is there any chance that the 6k would not be reversed? I am really worried that if the authorizes find out she will be in major trouble.

--Perky

Comments

[Luna]

She needs to tell IRS. They'll catch up with it eventually and it will be so much worse for her when they do. If she doesn't say anything she's committing fraud. Most likely it would mean jail time and a large fine.
Unfortunately she doesn't get to benefit for someone else's crime and will have to pay back her student loans on her own like the rest of us.
And the person who stole her W-2 will of course face legal repercussions.

[Gadebalran]

I have to agree with Luna, and would also suggest consulting with an attorney to cover all the bases. Also they should contact the police about the theft of the W-2, as that is most likely a federal crime since it deals with tax documents and the mail. Whoever stole that is looking at probable federal charges.

Also, since the W-2 has a persons social security number printed on it, she could easily become a victim of identity theft. She essentially already has, since they used her identity to file her tax returns. If she doesn't clamp down on this hard right now, it could quickly snowball into much larger problems beyond issues with the IRS.

[The Last Archimedean]

I agree. She should contact the IRS about the taxes and the cops about the stolen W-2. Maybe the IRS can help in the investigation: they do, after all, have the name and address of the person who filed the fraudulent tax return using her info.

[MA_Nightmare]

Good luck getting something done about it. I had an issue with tax fraud (someone claiming me on their taxes when I was never their dependent) and it held up my parents' tax returns. When I contacted the IRS about the issue, they wouldn't tell me who used my information, but asked me to provide any information I had about the person. So basically, I had to guess at who it was (I already knew, luckily) and even still, nothing was done!
She should report it, but don't be surprised if it drags out for ages.

[Skittles]

She needs to figure this out asap if she doesn't she might end up with fines making it take that much longer to pay off the ten grand.

[Perky]

Thanks all, that is what pretty much what I told her--if she does not at least contact the IRS, she could be worse off when it catches up to her. I mean there is always a chance they wont find out, but why chance it? I am also of the opinion that the IRS probably wont be able to reverse the 6k; but who knows. I'm hoping she will do the right thing.

[Perky]

Just an note on the header of this--This was told to me by a co-worker. I'm not the one who's W2s were stolen. I am still paying off my student loans, but I am in a payment plan, so I am not overdue on my loans, at the moment.

[CoG]

Yeah, she needs to tell. Years ago, there was a weirdness with my w-2s, and I got two of them. They appeared to be identical, and I had been in a situation before where I had been sent duplicates, so I assumed this was the same case, and only reported the one. Turns out, I need to add in both. Several years later, the IRS contacted me about the mistake. If I had filed both when I needed to, I would have received a small refund. But because I didn't report both, it was looked at as a late filing, and because of late fees accruing over YEARS, I ended up owing them some $800! Always 'fess up. Cuz they'll find out anyway, and then your coworker will be screwed.

[Axiluvia]

Not only that, but I would tell them, since usually to file taxes (at least with me and my husband) they entered in our SS numbers too. Sure, they might not have gotten the tax refund from you, but it's still identity theft, and that can open all kinds of cans of worms. I'd also suggest to your co-worker to check ALL her paperwork. If they sent the W2s to the wrong house, who knows what else those people have been opening of hers that they haven't missed yet.