Its everyones least-favorite time of year again tax season. And as if the process of filing your taxes wasnt daunting enough, theres another thing to worry about: tax return fraud. Between 2010 and 2011, the number of consumers affected by tax return fraud almost doubled, and it shows no signs of stopping anytime soon.
Tax return fraud is when a criminal uses someone else’s name, address and Social Security number to file a tax return and get the refund money owed to that individual. It sounds like itd be an easy crime to catch, but its not. Often, a victim wont know its happened until after she files. Then she’ll receive a letter saying that multiple returns have been filed under her name.
Now that many people are filing online and getting their refunds directly deposited to their bank accounts or via prepaid debit cards, this kind of crime is getting even easier. Filing online is fast and easy, and direct-deposit and prepaid-debit refunds significantly cut the amount of time it takes to commit the crime. Criminals today can quickly open bank accounts and collect the refund, and they can close and run before the victim even knows what’s happened. Its so easy, even an idiot could do it and you better believe that they are.
When Rashia Wilson and Maurice Larry, a couple in Tampa, Florida, allegedly filed 220 false tax returns over a three-year period, they raked in $1.9 million dollars of other peoples refund money. That number is staggering. That’s 220 fraudulent forms before the alarm bells started ringing.
And they werent even sly about it. According to Tampa Bay Online, Wilson bragged about her crimes on her Facebook page. She posted photos of herself dripping in diamonds and holding wads of cash so thick as to put rappers to shame. By the end she was feeling pretty invincible, as evidenced by a wall post that read: “YES I’M RASHIA THE QUEEN OF IRS TAX FRAUD. IM’ A MILLIONAIRE FOR THE RECORD SO IF U THINK INDICTING ME WILL BE EASY IT WONT I PROMISE U!
You’d think that the threat of jail time would deter this type of crook, but think again. Prisoners themselves love tax fraud. Last year alone, the IRS intercepted 173,000 fraudulent tax returns sent from the big house. Had those schemes panned out, it would have worked out to around $2.5 billion in stolen tax money and thats just what the feds caught. Imagine what a bunch of crafty criminals with an excess of free time can do. Its a pretty scary thought.
Your best weapon against IRS identity theft is your own diligence. Use the same common sense you would to protect yourself from any other kind of identity theft. Keep your social security card somewhere safe, and dont give your SSN out unless its truly necessary. Change your passwords online regularly, and check your credit reports for fishy activity.
If you get a notice from the IRS indicating that multiple returns have been filed under your name, or if your tax records reveal an employer you dont recognize, you may be a victim of fraud. In that case, contact the IRS as soon as you can.
The IRS says its working on improving fraud prevention. A nationwide sting operation this January nabbed 389 people who are suspected of IRS identity theft. The feds have tripled their number of yearly tax fraud investigations, and they claim to have stopped $20 million in fraudulent refunds from being issued last year that’s up from $6 million the past year. While this is heartening to see, the numbers suggest theyve still got a long way to go before this problem is under control. Do you think the IRS is doing enough to improve consumer fraud protection? Let us know in the comments.