There's a new criminal trend spreading across America and it's producing billions of dollars in profits for the people smart enough to pull it off. People are filing fake tax returns and collecting the checks.
Filing your taxes on time is hard enough for some people, and now you have to worry about a criminal racing you to it. The New York Times is reporting that the practice of filing a tax return for a dead person, a prisoner, or just for someone who hasn't filed their own taxes yet is the latest criminal trend and it's costing the government billions. This is how they're doing it:
The criminals, some of them former drug dealers, outwit the Internal Revenue Service by filing a return before the legitimate taxpayer files. Then the criminals receive the refund in a convenient but hard-to-trace prepaid debit card, typically sent to them by a bank or a tax software company, which downloads the amount approved by the I.R.S. The swindlers often provide addresses for vacant houses, even buying mailboxes for them, and then collect the refunds there.
The criminals are taking Social Security numbers from places like "health care facilities, assisted-living centers, schools, insurance companies, pension funds and large stores that issue credit cards." They make up a yearly income, tack on a fake return address, file it and wait for the check.
In 2010, the I.R.S. paid $6.5 billion to criminals who filed 940,000 fake returns. But that's just what the I.R.S. knows of. Inspector General J. Russell George says the I.R.S. "missed an additional 1.5 million returns with potentially fraudulent refunds worth more than $5.2 billion." That's $11.7 billion dollars paid out over 2.5 million returns in a single year, all of them fake. Sometimes they give out two returns in the end: the first goes to the criminal who stole your identity, and the second return to you, eventually, after almost a year of waiting because of the identity theft.
Despite budget cuts, the I.R.S. have significantly increased the measures in place to stop the identity theft since 2010, but the numbers keep rising. Even though only 30 percent of this year's suspected tax returns have been filed, they're already discovered 2.6 million false claims.
The area being hit the hardest is Southern Florida, home to thousands of elderly people ripe for healthy tax returns and even riper for identity theft. It's so bad that Wifredo A. Ferrer, the U.S. attorney for the Southern District of Florida, called the new trend an "epidemic." Two dozen members of the Tampa police department had their identities stolen and fake tax claims filed this year, including one officer who investigates identity theft.
This article is from the archive of our partner The Wire.
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