Scam of the day – January 22, 2015 – Tarrish Tellis convicted of income tax identity theft

We are just at the start of the income tax identity theft season;  income tax identity thieves file early (and often) in order to get their fraudulent income tax returns to the IRS before the victim files his own legitimate income tax return.  The theory behind income tax identity theft is simple and effective.  The identity thief steals someone’s Social Security number and then files a phony income tax return using that Social Security number with phony W-2s or 1099s that can fool the IRS into sending a large, fraudulent refund.  It doesn’t help matters that the IRS still does not match the legitimate W-2s and 1099s sent by employers with those filed by tax filers until late in the summer, long after theirs has sent refunds, but that is another story.

Tarrish Tellis was recently convicted of filing fraudulent income tax returns and stealing more than $700,000 from the IRS through fraudulent refunds obtained as a result of the phony tax returns.  Tellis obtained the Social Security numbers and names of 700 victims from an employee of the Alabama Medicaid State Agency.  Tellis is scheduled for sentencing on April 15th.

TIPS

The two best things you can do to protect yourself from income tax identity theft are to keep your Social Security number as safe, secure and private as possible and file your income tax return as early as possible to beat the identity thief to the punch.  As shown by the fact that the victims in this case became victims through no fault of their own, but due to the criminal acts of an employee of an agency that had access to their personal information, it is once again abundantly clear that we are only as safe as the places that hold our personal information with the worst security.

Scam of the day – January 9, 2014 – Latest developments in income tax identity theft

I have written in numerous Scams of the day about income tax identity theft and with good reason.  Income tax identity theft is a huge problem for the IRS and for taxpayers whose identities have been stolen.  I am sure I will be writing more about income tax identity theft as the tax filing deadline of April 15th approaches.  For those of you unfamiliar with how income tax identity theft works, it is a simple matter.  An identity thief gets access to your Social Security number and files a phony income tax return in your name complete with a counterfeit W2 and/or counterfeit 1099 indicating that a large refund is due.  If the IRS does not discover on its own that the income tax return is phony, which is often the case, the identity thief has effectively managed to steal money from the federal government.  This is a huge problem costing the government and ultimately, we the taxpayers billions of dollars.

But, how are you as an individual taxpayer harmed?  Identity thieves file income tax returns early in order to get a tax return in your name into the IRS before you file your legitimate return.  Once you file your legitimate return it is flagged because now the IRS has two tax returns filed for the same person and this delays by as much as six months or more your receipt of your legitimately owed tax refund while the IRS investigates the crime.

TIPS

The first way you can protect yourself from income tax identity theft is to protect the privacy of your Social Security number as much as possible because your Social Security number is an essential element for the filing of an income tax return.  The second thing you can do to protect yourself from becoming a victim of income tax identity theft is to file your income tax return as early as possible so that the identity thief does not have the opportunity to file before you.  If you are due a refund, it also makes good sense to get your tax return filed as soon as you can.

The IRS is spending millions of dollars to combat identity theft and they have a special telephone number for you to call if you have become a victim of identity theft.  The number for the IRS Identity Protection Specialized Unit is 800-908-4490.  The plain hard fact is that there is an easy way at little cost for the IRS to substantially reduce income tax identity theft, but they continue to not do so.  W-2 forms are not required to be filed by employers until February or March depending on the manner of filing used by the employer.  In fact, the filing is not even with the IRS, but is done with the Social Security Administration.  The Social Security Administration does not even send these documents over to the IRS until later summer and the IRS does not match the W-2s filed with the W-2s filed by employers until August, well after the IRS has already paid income tax returns based, in many cases on counterfeit W-2s.  How easy would it be to merely require employers to file W-2s with the IRS as well as the Social Security Administration and merely match the W-2s filed with income tax returns with those filed by employers before sending refunds?  This simple step could dramatically reduce income tax identity theft at little cost, yet the IRS continues to fail to implement this easy solution.

Scam of the day – October 14, 2013 – Income tax identity theft arrest

If you go through the archives of Scamicide, most recently in the Scam of the day for August 3, 2013, you will find much discussion of income tax identity theft and with good reason.  Income tax identity theft which occurs when an identity thief obtains the name and Social Security number of a person and then files a phony income tax return using the victim’s personal information but with counterfeit W-2s and 1099s that result in a bogus tax refund is a huge problem for the IRS.  It is also a big problem for the person whose identity has been stolen because when the identity thief manages to file the income tax return using the victim’s Social Security number before the real taxpayer files, the victim’s refunds is delayed tremendously while the IRS, with its usual “efficiency” investigates the matter.  It does not take a great deal of intelligence and sophistication to pull off this scam.  Income tax software such as Turbo Tax is usually used and it is a simple matter to have the refund sent by way of a debit card to an address provided by the identity thief.  The recent arrest in Florida of one income tax identity thief highlights that proposition that not identity thieves are criminal masterminds.  This particular scammer left his wallet containing 13 tax refund debit cards issued in 13 different names at the United Airlines ticket counter at the Tallahassee Regional Airport.  By the way none of the names on the cards matched the names of any of the passengers who flew on the particular flight taken by the identity thief.  However, surveillance video was able to identify the identity thief and all of this evidence was provided to the police.  But the story doesn’t end there.  the identity thief actually called the Tallahassee police to report his missing wallet whereupon the police, knowing who he was told him to come to the United Airlines Ticket counter in Fort Lauderdale, the city to which he had flown in order to pick up his wallet.  When he went to the ticket counter he was met by IRS agents who promptly arrested him.

TIPS

Becoming a victim of income tax identity theft can disrupt your life tremendously.  The two keys to preventing yourself from becoming a victim is to closely guard your Social Security number and to file early.  Income tax identity theft only works if the identity thief is able to get their tax return using your Social Security number filed before you file your legitimate tax return.  It would also help the situation if the IRS matched 1099s and W-2s with those filed by employers and financial institutions before issuing refunds based on easily counterfeited documents, but that is too easy a solution for the IRS to figure out.