Try Going the IRS Route to Get Even With a Person Who’s Defrauded You
Q: Your recent story about credit card identity fraud really hit home with me. But I actually knew who had stolen my identity and ruined my credit. I reported this woman--a former friend--to law enforcement, the credit bureaus and the retailers, but nobody seems willing to prosecute. After going through this nightmare, it makes me livid that this criminal will get away with it. Is there anything I can do to make somebody arrest this crook?
--VINDICTIVE VICTIM
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A: Unfortunately, your complaint is common. Authorities often consider credit card fraud a penny-ante crime that requires more time and money to prosecute than it’s worth. But although you may be unable to force police to file a criminal complaint against someone, you can get a modicum of revenge. In fact, you can get this thief the same way the feds got Al Capone--through the Internal Revenue Service.
Here’s why. If you have a debt that’s “forgiven”--i.e., uncollected and written off by the lender--you have something called cancellation of indebtedness income.
Therefore, unless the thief reported the $15,000 that she ran up on your credit cards as income on her tax return--unlikely--she’s guilty of tax fraud. And you have all the information needed to prove it.
Here’s what you do: Compile as much information about this woman as you can, including her name, address and, if possible, her Social Security number. It’s also helpful to know where she works and banks.
Then call the IRS tax fraud hotline. They’ll either take the information over the phone or send you a form that asks you to reiterate who you’re turning in and what you know about her tax crime.
The appropriate IRS buzzwords in this case are: The thief has “unreported income” from “cancellation of indebtedness.” Provide them with a copy of the credit report, showing just how much your onetime friend charged and with whom, as well as any other proof you might have of the amount of money involved and who benefited.
Incidentally, the IRS also has a reward system for people who turn in tax cheats. If you want to, you can fill out the reward form and if the IRS collects additional money from the cheat, they’ll pay you a percentage of what they get.
IRS tax fraud hotline numbers are located in several parts of the country. Agency officials suggest you call the one nearest you, but any office will be willing to take the information: Fresno office: (800) 859-8519; Austin, (800) 829-2872; Atlanta, (800) 829-0433; Philadelphia, (800) 829-0409.
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Q: In my deceased grandmother’s papers is a stock certificate dated April 25, 1914, of an old mining company. Where do I check to find out if these are of any value? Is it something that is too old for any records? The paper is in excellent shape. Maybe I should just frame it?
--WAUKEGAN HEIR
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A: The best place to start is with the Department of Corporations in the state where the company was headquartered. (It should say on the stock certificate.) They should know if the company went out of business or was acquired and when. If it was acquired, you’ll have to do additional sleuthing.
However, if you hit a dead end, you may want to hire a stock search service, which can research your certificate’s history and value, for a fee. R.M. Smythe & Co. ([800] 622-1880), for example, charges $75 to research the value of a stock. You simply send the company a photocopy of the certificate and in about five weeks, they’ll tell you whether it’s still worth something.
If the company is long gone and it’s shares have no intrinsic value, Smythe will do a free appraisal to determine whether your certificate has value as a collectible. Some stock certificates--those signed by a noteworthy person or that are particularly attractive or historically significant--have sold at auction for thousands of dollars. If all that fails, by all means buy a frame.
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Q: I left a company after 14 years and I was fully vested in a pension plan with them. I also had a 401(k) plan. I rolled my 401(k) into an IRA, but my company held onto my pension. I know that they bought out some other employees with less time than me, but they didn’t offer it to me.
They told me my pension is worth “X” dollars when I get to retirement age, which is approximately 25 years away. I’m afraid that they may not be around in 25 years and my pension will go with them.
Can I get that money to invest myself or do they have a right to keep it? Also, if I can get it, how do I know how much I’m really supposed to receive in a lump sum, especially if they say it’s worth “X” amount in 25 years?
--CHANGED JOBS IN CHICAGO
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A: Companies publish the rules of their pension plans in so-called summary plan descriptions and plan documents. These rules dictate whether you can or can’t get your pension money prior to retirement, says G. Patrick Byrnes, president of Actuarial Consultants in Torrance. A fair number of large companies don’t allow benefits to be paid to people who are under a particular age, such as 55. However, if the company does allow benefits to be paid prior to retirement--and if they have done it before--you have every right to demand that they do it for you too.
As for how much you ought to get, that’s not an easy question to answer. However, Byrnes suggests that you ask for a written calculation of your benefits, including what was used as your date of birth, your number of years of service, the salary for you in each year and what company contributions were made on your behalf in each of those years. By spot-checking that data, you should be able to get an idea of whether the company is at least working with the proper numbers.
If you suspect the company has underestimated your benefits but you aren’t a pension actuary capable of figuring out by how much, you may want to contact National Center for Retirement Benefits in Northbrook, Ill. This company reviews pension distributions for errors that favor plan participants. If it finds that the company has underpaid you, it will get a piece of the additional money you receive. Their phone number is (800) 666-1000.
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Q: Can you shed some light on what is happening regarding paying taxes on 85% of my Social Security? My wife is employed and I am retired.
The Republicans, in their contract with America, were going to take some action. I’ve written my legislators and received no response. My vote for party and president are in the balance.
--SHORTCHANGED IN CHICAGO
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A Presidential candidate Bob Dole has submitted a tax proposal that would repeal the 85% tax on Social Security, as well as reduce capital gains and many other taxes. (Prior to 1993, recipients of Social Security paid income taxes on 50% or less of their Social Security income. However, the 1993 tax act raised income taxes on Social Security payments for seniors who earned more than threshold amounts. As a result, a middle-income senior may now be in a millionaire’s marginal tax bracket.)
However, experts maintain that the prognosis for this proposal appears bleak mainly because Dole does not appear to be the presidential front-runner.
Kathy M. Kristof welcomes your questions, comments and suggestions for columns but regrets that she cannot respond individually to letters and phone calls. Write to Personal Finance, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053, or message kathy.kristof@latimes.com on the Internet. Please include your name, phone number and address.
