Tax Day Scam Artists Steal Dead Child's Identity

— -- Dear ABC News Fixer: I’m not looking for help from The ABC News Fixer, but I wanted to offer my experience so people know that the stolen refund scam does indeed happen. It happened to us last year, and it just hit us again.

Our daughter passed away last year at age three and a half. When our accountant tried to electronically file our tax return, it was rejected because a scammer had already filed a return in my daughter’s name and applied for a refund. It took a couple of months of paperwork and back-and-forth to correct it.

This week, when I filed my 2014 taxes, the electronic return again was rejected. My accountant said it was the same thing – someone had used our late daughter’s information to file a fake return. These scammers are dirt bags.

- Matt Hammond, Downingtown, Pa.

Dear Matt: You’re not kidding – these thieves are the lowest of the low. Besides holding up legitimate refunds for people who may really need the money, they target families like yours, who are already dealing with heartache.

You told The ABC News Fixer that your beautiful little daughter, Loie, was diagnosed at age 1 with a rare, incurable nervous system disorder called metachromatic leukodystrophy, or MLD. We can only imagine your grief at losing her two years later – and then finding out she was victimized in death by an identity thief.

How do these scam artists sleep at night?

Victims of this scam need to act quickly – as you well know. They’ll need to get a police report and file a fraud affidavit with the IRS. And they’ll need to prepare for a long haul, because it can take 120 extra days to confirm the fraud and process a refund.

According to the Federal Trade Commission, approximately 110,000 taxpayers filed complaints about stolen refunds last year. Most people don’t even realize they’ve been hit until they file their real return and are told the IRS already has one on file in their name.

We wondered how your family could be hit twice, since fraud victims typically receive a PIN from the IRS to prevent fraud on their next year’s tax filing. It turns out that since Loie had already died by the time the fraud was discovered last April, she was not issued a PIN, said Gene Steger, a certified public account and attorney in Chadds Ford, Pa., who helped you unravel the fraud last year and just learned that it apparently happened again this year.

An IRS spokeswoman provided this statement to ABC News, noting that the agency can’t comment on specifics of any taxpayer’s situation:

“We want to express our deepest sympathy to this family. It's important to note that we have special procedures in place to help victims of identity theft with tax issues.

“While we are prohibited by federal law from discussing any individual's private tax matters, we know identity theft is a frustrating, complex process for victims, and we have taken several steps over the past several years to try to prevent this very type of identity theft.”

The tax agency routinely locks down the accounts of deceased taxpayers once they no longer would be involved in a tax return (which, we can assume, wasn’t yet the case with Loie, as she died in the first part of 2014).The good news is legislation recently ended public accessibility of the Social Security Death Master File, which, we are told, is where some of the bad guys obtain Social Security numbers. Other proposals are afoot to mask portions of Social Security numbers on employer-issued W-2 forms and stiffen penalties for tax-related identity theft.

The bottom line, folks: Keep your Social Security number as private as humanly possible.

- The ABC News Fixer

Got a consumer problem? The ABC News Fixer may be able to help. Click here to submit your problem online. Letters are edited for length and clarity.