Call for Action Investigation: Refund Fraud

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She's always careful to shred any personal information so it doesn't get in the wrong hands.

That's why Carla Albers was shocked to hear from her accountant that she and her husband's tax returns had been rejected.

She was told someone had already filed one in their names.

"They wouldn't tell us exactly what had been filed, just that something had been filed using our Social Security number, our date of birth, and names," Carla said.

Carla checked and says their identities haven't been compromised in any other way, but they had to file a police report, call credit reporting agencies, and submit paperwork to the IRS.

"We filed a joint tax return for 20 some-odd years, why somebody wouldn't catch ... there must have been something different that was filed," an incredulous Carla said.

I talked to an IRS special agent who investigates these kind of cases. He tells me refund fraud is up 66 percent from the year before. He says they found close to 400,000 false tax returns that were filed last year, saving the government $1.3 billion that could've been handed over to crooks.

Carla and her husband weren't expecting a refund, so they're not out any money, but the IRS says if they were it could take up to six months to get a refund. The IRS will give them a special PIN, so in the future they will be identified by those numbers.

Since identity theft is so common, your best defense is shredding old documents, checking your accounts, getting a copy of your credit report every year, and never sharing personal information with a stranger.