security — May 20, 2013

Is This the New Normal?

by Bob Williams

tax fraud

For many American taxpayers, the 2013 tax season was fraught with potholes. From delayed filing to postponed forms, there were lots of obstacles to avoid. But for some, the real problem came after their income tax return was filed. It came in the form of a rejection from the IRS:

"The return was rejected because a return with the taxpayer's SSN has already been accepted by the IRS."

After the shock and disbelief wore off, many of these taxpayers came to understand that they had fallen victim to identity theft. It's a crime that has yet to come to full flower, unfortunately. The IRS says in this year alone, its Criminal Investigations unit has already initiated more than 500 probes into refund fraud from identity theft. There were a total of 898 such investigations in all of 2012, with 223 people convicted.

The CI unit has established four centers around the U.S. with the primary mission of detecting refund fraud - and they've been successful. For example:

Three South Florida women were convicted for their roles in an identity theft refund fraud scheme in April. Jail time ranged from 317 months in federal prison to 42 months behind bars, and the defendants will have to pay more than $3.8 million in restitution. Court documents say the three ran an identity theft operation that filed some 2,000 fraudulent tax returns that would have netted them $11 million in bogus refunds.

In another April case, Ovidiu Isac, a Romanian national, was sentenced in Chicago to 85 months in federal prison for heading up a network of some two dozen people who used their bank accounts to receive false tax refunds. The bogus returns had been submitted in the names of Romanians who had visited the U.S. on exchange or student visas. Nearly 500 fraudulent returns, each seeking a refund between $4,000 and $7,000, were filed between 2007 and 2009. Isac was ordered to pay more than $1.6 million in restitution, and could face deportation after completing his sentence.

A Case for Caution

How do these criminals get your information in the first place? Sometimes, you don't even know -- until it's too late. The IRS cases show identity theft can happen almost anywhere. One crook stole identities from the medical records facility where she worked; another took Social Security Numbers and other information from a community college financial aid office; and a former U.S. Marine even used the identities of his fellow soldiers in Afghanistan to file fraudulent tax returns.

But there are things we can do as taxpayers to help guard our personal information. First, don't be enticed to give your personal information to anyone or any purported organization -- especially if you didn't originate the contact. And if you get an e-mail from the IRS, trash it. The Internal Revenue Service will NOT send you an e-mail. If they want to communicate, the IRS will send a letter.

If you do get a letter from the IRS about your identity possibly being stolen, respond immediately to the address or phone number on the letter. And one more thing: Leave your Social Security card at home. If your wallet or purse is lost or stolen, you don't want a legitimate card floating around  the criminally inclined.

For more information on identity theft -- and more measures we can take to avoid it, visit the IRS webpage. Oh, and keep checking back at We're sure you haven't heard the last of this from us. Stay safe, my friends.

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