Monday, May 28, 2012

New York Times - Tax Fraud Reaps Billions by Exploiting Identities Stolen by Employees

Criminals are filing thousands of false tax returns and receiving hundreds of millions of dollars in wrongful refunds according to law enforcement officials interviewed by the New York Times.

The I.R.S. failed to detect 1.5 million fraudulent returns with refunds worth more than $5.2 billion in 2010 according to J. Russell George, the Treasury inspector general for tax administration.
"The police say employees steal the information and sell it. Most vulnerable are records from health care facilities, assisted-living centers, schools, insurance companies, pension funds and large stores."
The thieves file a return very early so they can receive the refund before the real taxpayer files. Often the refund is in the form of a hard-to-trace prepaid debit card (introduced by the government to help people without bank accounts). The fraudulent tax returns list vacant houses as the tax payers address so the criminals can pick up the refund in an untraceable fashion.
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Sources:
(a) With Personal Data in Hand, Thieves File Early and Often - New York Times, May 26, 2012

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