Tax Refund Theft: How Thieves are Robbing You and the IRS

By | February 5, 2012 at 9:11 am | No comments | Featured | Tags: , ,

Hey Bubbas,
What happens when you combine the the IRS and thievery, (and no, I’m talking about two SEPARATE things here!)  Identity thieves are using your social security information to file tax returns in your name. But they aren’t PAYING your taxes, they’re asking for refunds in your name. So when you file your legitimate tax refund, the IRS kicks it back to you with a little note attached to your return. From the Ft. Worth Star Telegram:

“When Fort Worth accountant Cyndy Kimberling tried to electronically file a tax return for two of her clients last year, a message popped up from the IRS saying the returns were rejected because they had already been filed. But they hadn’t. “The message said, ‘Your Social Security number had already been used,'” Kimberling said. “I had never seen that before last year, but we’re going to see this all over the place now. “Kimberling said she is already seeing evidence of more ID fraud activity this tax filing season, which started two weeks ago.”

Thieves have realized that the IRS is one of those places that tends to deal in an awful lot of money.  It brings to mind notorious robber Willie Sutton’s famous answer to the question about why he robbed banks – “because that’s where the money is.”  And so it is, both petty and organized criminals have taken to filing phoney tax returns in bubba’s name. Whether one at a time, or by the hundreds, they’re after your tax refund.

“Last year, the IRS said it stopped more than 260,000 fraudulent returns with confirmed cases of identity theft. The thieves were after $1.4 billion in refunds. In 2010, almost 49,000 fraudulent returns sought $247 million, according to the IRS….Social Security numbers have been taken from a variety of sources by the thieves, including schools, hospitals, government agencies and banks. Neil O’Farrell, executive director of the Identity Theft Council in Walnut Creek, Calif. said tax ID fraud went viral last year after crime rings in Tampa, Fla., began teaching classes of 50 to 100 people at a time how to cheat the system. Authorities arrested 49 people in September suspected of filing nearly 10,000 fraudulent refunds valued at more than $130 million using online software. “The thieves got together and realized it was much safer filing bogus IRS tax returns than selling drugs,” O’Farrell said.”

Star Telegram reports that victims of this type of tax fraud, while having to jump through several hurdles to prove their correct identities and refile a new paper tax return, usually get their proper tax refund. However, the bad news is that many have had to wait months for that IRS refund check. Victims of this scam are then given a special security code for future filings. Is there anything you can do to avoid this hassle of all hassles?  In a word or two, not really. Other doing your best to protect your identity through normal channels, most of this social security number “harvesting” comes from institutions that require your SS# in the normal course of business. And what is the IRS doing about it?  They’re trying to play catch up with the criminals, as most victims usually end up doing. They are designing screening filters that they say will help them spot fakes. You can find out a little about how they’re dealing with this directly from the IRS. Here are some warnings and recommendations from the IRS on protecting yourself and family from identity theft.

You just THOUGHT that real thieves ran the IRS, now the thieves are being victimized by thieves! But really, it hurts all of us when our own taxes are being taken by criminals that range from small time hoods to organized crime rings.

The original article can be found here. 

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