14 Busted In Tax Fraud Identity Theft
Calling all identity thieves, stop wasting your time trying to open new credit card accounts or taking over existing credit card accounts, the money is in IRS tax related identity theft.
The IRS is struggling to keep up with all the fraudulent income tax returns coming in via US postal and online filings. Criminals are obtaining millions of Social Security numbers and filing under the victims personal information and collecting their refunds at an alarming rate.
Reuters reports “Fourteen people were arrested on Wednesday and charged with operating a long-running U.S. identity theft ring that filed thousands of fraudulent federal income tax returns to claim $65 million in illegal refunds, according to the U.S. Attorney’s office in New Jersey.”
Criminals are filing thousands of fake returns using real peoples information and collecting millions. The U.S. Attorney was quoted saying “The defendants in this case allegedly tried to steal $65 million using stolen identities to obtain refunds to which they were not entitled.” But they still managed to get $11.3 million. Many of the refund checks were being sent to the same addresses.
The Treasury Inspector General for Tax Administration reports over 2 billion dollars lost annually to tax related identity theft with victims doubling on 2011 to over 641,000. The Treasury also stated that $26 billion dollars could be lost in the next 5 years if the IRS doesn’t fix the problem. The problem stems from the IRS not being able to effectively determine if a return is being filed in good faith or fraudulently.
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. By using 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.