Smart TaxesSmart Taxes

Stolen IDs used to snag tax refunds

The IRS is cracking down on schemes that use ID theft to file for fraudulent tax refunds. New safeguards are delaying refunds to early filers.

By MSN Money Partner Jan 31, 2012 5:23PM

This post is by Alan Fram of The Associated Press.


The federal government has swooped down on 105 people in 23 states in the past week as part of a nationwide crackdown on identity theft and tax refund fraud. The move was timed to warn cheats to beware this tax season, the Internal Revenue Service said Tuesday.


The sweep ranged from Alaska to Florida and included 80 complaints and indictments and 58 arrests. It has already produced a handful of guilty pleas and sentencings. Besides the IRS, the Justice Department's Tax Division, the Postal Service and local U.S. attorney's offices were involved in the investigations, which lasted months and, in some cases, years.


IRS officials say the use of stolen identities to file for fraudulent tax refunds, generally involving stolen Social Security numbers, is a growing problem. The agency says it found 260,000 income tax returns with confirmed attempts at identity fraud last year and blocked the payment of $1.4 billion worth of refunds.


"The timing is not coincidental," Steven Miller, the IRS deputy commissioner for services and enforcement said. "It's the start of tax season, this is a large issue and we want to send message out there."


Miller said schools and hospitals are a common source of stolen Social Security numbers. Post continues below.

The cases, some of which were announced previously by local officials, include:

  • Three women from Dayton, Ohio, accused of getting tax refunds by using identities stolen from mentally disabled adults.
  • A Montgomery, Ala., woman accused of using her job as a security guard to steal identities of people served by a state agency; she then allegedly used the data to file false returns.
  • A Colorado Springs man charged with stealing identities of the clients of a company that had gone out of business to fraudulently file for tax refunds.

In the past week, IRS officials also have visited 150 money-services businesses to probe for identity theft or efforts to file for bogus refunds. The action was conducted in nine metropolitan areas the agency considers high risk: Atlanta; Birmingham, Ala.; Chicago; Los Angeles; Miami; New York; Phoenix; Tampa; and Washington, D.C.


In addition, the agency is auditing more than 250 check-cashing operations around the United States, in part to try to spot any identity theft activity.


Miller said the IRS has installed new filters on its computers this year in an attempt to spot identify fraud before the agency pays a phony refund. He said this has caused delays of about a week for early tax return filers to get refunds, but he said he does not expect those delays to last.


Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


More from MSN Money:


Feb 1, 2012 12:42PM
Takes that bunch a while to catch on doesn't it.
Feb 10, 2012 6:40AM
And the Democrat's in Washington say its "OK America" for illegal's to do this because its only money and we can't offend the Hispanic vote.  If we do we won't get reelected.  Is it right for our tax dollars to just go out the window.  I personally want to thank the IRS for its increased enforcement actions.  Its time to really get tough and ensure that Congress takes action on illegal's.  If they don't act now, you must act in November and send them home.
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.