One well-organized tax refund crime ring that spanned several years, and that involved stolen Social Security numbers and birth dates, scored well into the millions of dollars, costing the Treasury Department millions. The fake tax returns were filed, but luckily, some were intercepted by the government. But how did this happen at all?
The ring leader tracked snail mail routes and purchased address lists covered by single mail carriers. They’d then snatch refund checks. A clue was that most of the stolen identities originated from Puerto Rico. Though Puerto Ricans have SS numbers, the IRS doesn’t tax them unless they’re paid by the U.S. government or U.S.-based companies. These SS numbers are especially prized to crooks.
But the problem goes well-beyond Puerto Rico. A recent report says the IRS paid $132 billion in bogus tax refunds over the past 10 years. In fact, the IRS is in violation of the Executive Order 13520, which President Obama had signed to reduce improper refunds, says the Treasury Inspector General for Tax Administration.
What can you do?
- If you don’t pay any income tax, you can still claim a refund, due to the Earned Income Tax Credit. In 2012, 21-25 percent of all claims were improper, says the recent report. This translates to $12-$13 billion being misspent. Even audits can be erroneous, meaning your tax refund may never have been approved.
- Make sure your tax refund is definitely yours.
- Get a locking mailbox. Locked mail cant be easily stolen.
- File early. If you file before a crook does you’ll get your refund.
What the IRS should do:
- One way to determine if an online filing is legitimate is to check the reputation of the device issuing the tax return. If the PC, Mac, tablet or smartphone has a history of online criminal behavior or is exhibiting real-time suspicious behavior, the transaction could be flagged for review before the return is accepted or processed.
- When using an advanced device reputation as the first check in the fraud detection process, the IRS would be able to stop many more fraudulent tax returns as well as downstream fraudulent activities.
Robert Siciliano, personal security and identity theft expert contributor to iovation. He is the author of 99 Things You Wish You Knew Before Your Mobile was Hacked! See him knock’em dead in this identity theft prevention video. Disclosures. For Roberts FREE ebook text- SECURE Your@emailaddress -to 411247