Dr. Nancy Babbitt has never has an issue with her taxes in the past.
As in past years, the Rapid City physician worked with her accountant before submitting her tax returns on March 10 to the Internal Revenue Service.
But before she could congratulate herself on a job well done, a message popped up on the computer screen telling her that her tax return had been rejected, Babbitt said.
The reason: Someone had already filed tax returns in her name.
Babbitt was dumbfounded.
"I was shocked," she said. "I didn't know what to do, how this happened or what was going to happen next."
She would later learn that she had become a victim of tax refund fraud, which has become increasingly prevalent throughout the nation and is now being seen in Rapid City.
In the case of Dr. Babbitt, her Social Security number was used to file a falsified tax return that led to a tax refund.
According to the Wall Street Journal, the IRS found nearly 580,000 returns claiming $3.6 billion in fraudulent refunds in the 2013 filing season. The IRS said it prevented refunds in about 96 percent of the cases, according to the Journal.
A Rapid City accountant said he is seeing more cases of tax fraud in this area.
"It's still fairly rare around Rapid City, but unfortunately it has happened to a few of our clients," said Paul Thorstenson of Ketel Thorstenson.
Some criminals have stolen millions of dollars using this scam.
A woman in Tampa, Fla., was recently sentenced to 21 years in prison after stealing at least $3 million and taunting the IRS on Facebook, according to the Tampa Tribune.
Babbitt, the owner of the Creekside Medical Clinic at 2620 Jackson Blvd., said she never heard of such a crime until she became a victim.
After learning her Social Security number was stolen, she checked to see if her bank account or credit cards indicated any unusual activity. So far, everything else appears untouched.
Babbitt also has no idea how her Social Security number was stolen. She managed to file her taxes for this year by doing a joint return with her husband.
Thorstenson said it's easier than ever, however, to steal a Social Security number. What was once a number used only to collect Social Security benefits is now used as a means of identification.
"My Social Security card, which was issued in 1961, says on it: 'This shall not be used for identification purposes,'" Thorstenson, 52, said. "Now, it's used for everything."
Today, a Social Security number is used to get a loan from a bank, shop online, get a driver's license, obtain a credit card and fill out a job application.
Thorstenson said the criminals who commit these scams tend to collect numerous Social Security numbers and file returns en masse.
"I've heard criminals take several Social Security numbers, file hundreds of returns and have it deposited into one account," Thorstenson said. "Once the deposits go through, they grab the money, close the account and leave town."
As long as a person has a name and valid Social Security number, they can "dummy up" a W-2 tax form and fill in whatever numbers they'd like, he said.
Thorstenson said tax refund fraud had become increasingly prevalent as the government has made it too simple to collect a tax refund.
"What caused this whole problem is that Congress is using the tax system to dole out money instead of collecting it," he said. "It's too easy to abuse the system."
In the meantime, Babbitt is taking steps to further protect herself from identity theft. She's had to let credit corporations know her Social Security number was stolen; she constantly monitors her credit card to make sure no other charges are filed, and she will have to attach a PIN number to all future tax returns so the IRS can verify her tax return is valid.
Having your identity stolen can create major problems, but if it's only used as part of a tax refund fraud scam, it won't cause any permanent damage, Thorstenson said. It's a problem that can be solved with some time and paperwork.
"It's a nuisance. It's not a problem that's insurmountable," Thorstenson said. "It's become so common the IRS has a form you fill out and then you wait several months and it's taken care of. They will get it resolved."