Recently the Justice Department through the U.S. Attorney’s office for Alaska in cooperation with the Justice Department’s Tax Division announced a ninety count indictment against eleven people accused of filing phony income tax returns between January 2010 and March 2012 and claiming millions of dollars in phony refunds. The indictments allege that the defendants used a common income tax fraud tactic that takes advantage of the fact that Puerto Rican citizens do not have to pay federal income taxes although they do have to have Social Security numbers. The defendants are accused of stealing the names and Social Security numbers of Puerto Rican citizens and filing phony income tax returns with phony claims for non-existent refunds. Particularly when tax returns are filed early before W-2s are required to be filed by employers it is easy to defraud the IRS.
It is good to see federal law enforcement not only taking this matter seriously, but actually getting indictments. Much still remains to be done including new laws and regulations to make it more difficult for identity thieves and scam artists to file phony tax returns. As for each of us, the best we can do is to protect our Social Security number as much as possible and to file your income tax return as early as possible to beat the scammer to the punch.