Posted on March 18th, 2013 No comments
The Internal Revenue Service has deputized law enforcement officers from 10 Tampa Bay-area agencies as a part of the Tampa Bay Identity Theft Alliance, which investigates allegations under federal bank and money laundering laws and exercise authority outside their current jurisdictions as local officers.
The new Special IRS Criminal Investigators were sworn in at the Florida Department of Law Enforcement’s Tampa Bay Regional Operations Center.
The Tampa Bay Identity Theft Alliance was formed in July 2012 to combat the high number of identity theft crimes in Tampa and surrounding areas. The goal of this specialized law enforcement team is to investigate ID theft crimes and pinpoint vulnerabilities in personal and business transactions.
Members of the Tampa Bay Identity Theft Alliance who were sworn in today include agents from the Florida Department of Law Enforcement, officers from Tampa, Clearwater, Largo, Brooksville and St. Petersburg Police Departments and deputies from Hillsborough, Polk, Manatee and Hernando County Sheriffs Offices.
Other partners include the IRS, Federal Bureau of Investigation, Secret Service, Social Security Administration Office of Inspector General, United States Postal Inspection Service, Department of Veterans Affairs Office of Inspector General, Pasco County Sheriffs Office and Plant City Police Department. Outreach partners are Crime Stoppers of Tampa Bay, CBS Outdoor Advertisers, HART LINE, Direct Mailers and the Tampa Bay Chapter of the Association for Certified Fraud Examiners.
Five simple steps to protect your identity:
- Do not throw away ATM receipts, credit statements, credit cards, or bank statements without first shredding them.
- Never give out personal information online simply because someone asks for it.
- Never give your credit card number or social security number over the telephone unless you initiated the call.
- Reconcile your bank account monthly and notify your bank of discrepancies immediately.
- Review a copy of your credit report at least once each year.
What to do if you are a victim:
- Flag your credit reports. Contact the three major credit bureaus (Equifax, Experian and TransUnion).
- File a complaint with the Federal Trade Commission at 1-877-ID-THEFT (1-877-438-4338).
- File a report with the local police.
- If you received a notice from the IRS, call the number on that notice.
- Fill out the IRS Identity Theft Affidavit, Form 14039.
- Call IRS Identity Protection Specialized Unit 1-800-908-4490 if you think you are at risk due to a lost/stolen purse or wallet.
Posted on October 10th, 2012 No comments
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Michael B. Steinbach, Acting Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and José A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division (IRS-CI), Miami Field Office, announced that Jobson Cenor, 23, of North Miami, pled guilty before U.S. District Judge Robert N. Scola to one count of wire fraud and one count of aggravated identity theft in connection with an identity theft tax refund fraud scheme. Sentencing for Cenor is scheduled for December 14, 2012. He faces a possible maximum statutory sentence of 22 years in prison.
According to documents filed in court, in 2011, Cenor and co-conspirator Dorothy Boulin agreed on a plan to use stolen personal identifying information (names, dates of birth and Social Security numbers) of individuals to file fraudulent tax returns seeking refunds. On July 12, 2012, Dorothy Boulin was sentenced to 70 months imprisonment by U.S. District Judge K. Michael Moore.
According to documents filed and statements made in court, in late 2011 and early 2012, defendant Cenor provided Boulin with more than a hundred names, dates of birth, and Social Security numbers of U.S. Marines, many of whom were serving in Cenor’s unit in Afghanistan. Cenor provided the personal identity information to Boulin by creating draft messages in e-mail accounts with the personal identifying information and then sending Boulin the log-in information for the e-mail accounts.
On January 17 and January 19, 2012, Boulin used the personal identifying information of several Marines to submit fraudulent tax returns seeking refunds. On February 9, 2012, law enforcement searched Boulin’s residence and found several lists that had the name, dates of birth and social security numbers of U.S. Marines. Boulin identified Cenor as the individual who had provided the lists. On that same day, Cenor and Boulin had a telephone conversation in which they discussed splitting the proceeds of the identity theft tax refund scheme. During that call, Cenor directed Boulin could keep his share of the proceeds until he returned from overseas.
Mr. Ferrer commended the investigative efforts of the FBI and IRS-CI. The case is being prosecuted by Assistant U.S. Attorney Michael N. Berger.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov
Posted on October 10th, 2012 No comments
Federal agents busted dozens of South Florida suspects charged with identity theft and income tax fraud in a major assault on the epidemic crime.
Federal authorities stepped up their assault on the viral-like crime of identity theft and tax fraud, arresting dozens of South Florida suspects — including a Miami Gardens man facing a murder trial — on charges of filing fake returns totaling millions of dollars.
Federal prosecutors in Miami plan to unveil charges against more than 40 defendants accused of stealing the personal information of other people and using it to file fraudulent tax-refund claims with the Internal Revenue Service. U.S. Attorney Wifredo Ferrer plans to hold a news conference at 3 p.m. Wednesday to address the new charges.
Among those arrested and charged early Wednesday: Lineten “Link” Belizaire. In August, Belizaire was charged with the Lauderdale Lakes killings of two women and a baby.
Belizaire, 21, of Miami Gardens, pleaded not guilty in the shooting deaths of Octavia Barnett, 21; Barnett’s roommate, Natasha Plummer, 25; and Plummer’s 6-month-old boy, Carlton Stringer Jr..
Belizaire, who was out on bond awaiting trial in Broward, was taken into custody to face ID theft and tax fraud charges in federal court.
Wednesday’s takedown by a new South Florida task force involving the IRS, FBI and other law enforcement agencies follows a Justice Department’s Oct. 1 edict that gave authorities greater leeway to pursue tax-fraud offenders who swipe other people’s identities to fleece the federal government.
“This takedown is big and it’s only going to get bigger,” Jose “Tony” Gonzalez, special agent in charge of the IRS’ criminal investigations unit, told The Miami Herald. “Our job is to protect the integrity of the tax system and honest taxpayers.”
The problem is so pervasive that an inspector general for the Treasury Department recently issued a report that found the IRS paid out more than $5.2 billion in tax refunds to fraudsters who filed about 1.5 million fake returns using the stolen identities of other people.
Among major U.S. cities with the most fraud-related tax filings: Tampa (88,724 returns, with refunds of $468,382,079); Miami (74,496 returns, with refunds of $280,509,449) and Atlanta (29,787 returns, with refunds of $77,113,392).
Over the past year, dozens of suspects charged with theft of IDs and government funds have been convicted in Miami.
The most high-profile case: In late August, William Joseph, a former University of Miami defensive tackle who played in the NFL for much of the past decade, pleaded guilty to tax-related fraud charges in federal court.
Joseph and other defendants — including a former Oakland Raider teammate, running back Michael Bennett — were convicted of either cashing dozens of fraudulently obtained tax-refund checks in other peoples’ names or seeking a loan with fake collateral. Their take totaled hundreds of thousands of dollars, according to court records.
Joseph, 32, of Miramar, cut a plea deal in hopes of reducing his potential sentence. He pleaded guilty to theft of government money and aggravated identity theft, the latter of which carries a mandatory two-year prison sentence. He admitted cashing a $10,088.27 Treasury Department refund check in the name of a person with the initials “I.P.” at a check-cashing store in North Miami in April, according to his plea agreement.
Unbeknownst to him, the store was a front for an FBI undercover operation.
Joseph agreed to cooperate in the ongoing investigation into tax-related fraud, according to the plea deal signed by him, his lawyer and prosecutor Michael Berger. That assistance could be a factor at his sentencing Nov. 9 before U.S. District Judge Kathleen Williams.
Earlier this year, FBI agents faked out the two ex-NFL football players and a former local high school star by setting up the check-cashing “front” in North Miami. The undercover operation, using audio and video recordings, sacked:
• Joseph, who was drafted in the first round by the New York Giants in 2003 and last played with the Oakland Raiders in 2010.
Bennett, a University of Wisconsin halfback who was drafted in the first round by the Minnesota Vikings in 2001 and concluded his career with the Raiders in 2011. Bennett, 33, of Tampa, pleaded guilty to a wire fraud charge in August.
• Louis Gachelin, a Miami Jackson High and Syracuse University defensive lineman who signed as a free agent with the New England Patriots in 2004. Gachelin never made the final roster. In July, Gachelin, 31, of Miramar, pleaded guilty to theft of government money and aggravated ID theft.
Here’s the root of the problem: Scammers filing fabricated tax returns have exploited a hole in the IRS electronic filing system, according to the U.S. Government Accountability Office.
The federal watchdog agency found that the Internal Revenue Service does not match tax returns to the W-2 income forms that employers file until months after the filing season ends on April 15. Employers file them in late February or early March; the IRS does not match them up with employees’ incomes reported on 1040 forms until June.
That’s way too late to catch identity thieves who file false returns in other people’s names early in the year and have already received and cashed the refund check.
Posted on September 27th, 2012 No comments
As identity theft has skyrocketed in the last five years, more South Floridians are being plunged into the aggravating and painfully slow process of proving they exist after thieves steal their identity.
From thieves installing ATM skimmer devices at Publix Supermarkets to those filing fraudulent tax returns in someone else’s name, identity theft has left many South Florida victims in financial limbo. College students can’t get financial aid. Some people can’t close on homes they were scheduled to buy. Others can’t get new credit cards. Thousands have had to wait more than a year for federal tax refunds they were counting on to pay bills.
Identity theft affects South Florida’s young and old — from babies’ newly issued Social Security numbers being filched to thieves stealing identities from the graves of the deceased.
Even law enforcement officers haven’t escaped. Davie Police Capt. Dale Engle, has been waiting seven months for his federal tax refund check, since a thief filed for one in his name — just five days before Engle tried to submit his own. “It’s a huge problem,” Engle said.
Such is the reality in South Florida, where the dramatic jump in reported incidents to the Federal Trade Commission — from 8,317 cases in 2007 to 17,668 in 2011 — has made us the identity theft capital of the nation. More identity thefts per capita occur here than in New York, Los Angeles, Chicago or any other large urban area of the country.
Last year saw the number of identity thefts explode, with claims jumping 76 percent in Broward, Palm Beach and Miami-Dade counties. South Florida reports increased from 184 per 100,000 population in 2010 to 324 per 100,000 population in 2011, according to the FTC.
For Richard Zadanoff, 77, having his identity hijacked meant his plans to move from a home to a condo were upended. The Tamarac man discovered the problem earlier this year during tax season, but he couldn’t close on the condo because the bank found records of someone else’s claim to be him at a different address.
Zadanoff stood in line for hours at the Internal Revenue Service office in Plantation to report that his identity had been stolen — only to be turned away because so many others were ahead of him. He finally got an IRS office in Virginia to take his information by phone.
Victims of tax-related identity theft are required to file affidavits with the IRS and report the case to local police. Some departments have balked because they figure the federal government will investigate, said Cindy A. Liebes, the FTC’s Southeast regional director. But sometimes victims can’t get credit agencies to list the identity theft in their files unless there is a police report, she said.
The FTC also recommends that victims report the crime to the Social Security Administration.
Carol Flynn, of Davie, said the IRS didn’t tell her to report her tax-related identity theft to local police, the FTC, the SSA and the credit reporting agencies. She’s still waiting to hear about her refund, but said U.S. Sen. Bill Nelson’s staff directed her to a taxpayer advocate who is updating her about her case.
At times, state and local agencies also have inadvertently put personal information online.
Bruce Hogman, a senior computer systems consultant who lives in Fort Lauderdale, was upset when he learned that Broward County had published some of his personal information online.
“My Social Security number was on the web for five years before a neighbor told me,” he said.
Broward County promptly removed his number after he alerted them, Hogman said.
Still, he fears others may be exposed to identity theft because some of their personal information may remain online in public documents such as deeds.
Lyz DeMarco, of Hollywood, couldn’t believe it when the IRS rejected a tax return because a thief had claimed her identity first; she had already been a victim twice before.
Once, someone tried to buy surfboards in Texas with her stolen credit card number. “It was a crazy amount of surfboards,” she said. Another time someone tried to use her debit card at a sports bar. “They must have made a counterfeit one,” she said. “I had mine with me.”
DeMarco said she encountered hurdles when she tried to report the crime, with police telling her they didn’t take IRS cases. On a third try, police took a report. The IRS required her to submit an “identity theft affidavit” to prove who she was. She spent hours on the telephone with different IRS staffers before her theft claim was finally accepted.
Despite the ordeal, which lasted half a year, DeMarco considers herself lucky. She called the IRS on Wednesday, and after she was on hold for an hour, this time there was good news.
Her refund was being wired into her bank account — with $50 in interest.
“I was floored — I was absolutely floored,” DeMarco said.
Posted on September 27th, 2012 No comments
TAMPA — The Internal Revenue Service is tripling the number of staff members nationwide who are dedicated to addressing the issue of identity theft tax refund fraud, U.S. Rep. Kathy Castor said.
Castor, the Tampa Democrat, said she was briefed last Friday by IRS officials regarding progress the agency is making to tackle the epidemic of fraud in which the Tampa area leads the nation.
Thieves use stolen personal information — such as names, dates of birth and Social Security numbers — to file tax returns with fake income information and obtain fraudulent tax refunds.
According to a recent inspector general report, thieves in the Tampa area alone stole more than $400 billion last year from federal taxpayers this way. Nationwide, identity thieves are stealing billions from the federal government through refund fraud.
Castor said the IRS assured her it is increasing its screening filters, designed to detect fraudulent returns before refunds are issued. Across the board, law enforcement officials have repeatedly said the fraud is so pervasive, it cannot be stopped by arrests and prosecutions — that the IRS needs to stop sending “refunds” to thieves.
The IRS told Castor that so far this year, it has prevented 2.3 million fraudulent refunds from being issued, totaling $15 billion. That’s compared to 1.4 million fraudulent refunds stopped in 2011, worth $11 billion.
Part of that effort apparently involves increasing scrutiny of tax filings originating from Tampa, Castor noted.
“I said, ‘Geographically, where you know there is an epidemic, like the Tampa Bay area and the state of Florida, I assume filters are place.’ They said yes.
“They say they’re on the cusp of instituting many, multiple new filters to prevent the fraud from happening in the first place,” Castor said.
“So they will flag, for example, multiple returns coming to the same address. That’s a question I keep getting. How can it be that the IRS is sending multiple debit cards and returns to the same address over and over?”
Castor also noted something police have been saying: often crooks will use the same fake numbers repeatedly on numerous returns. For example, two suspects indicted this week were accused of filing 17 tax returns, each seeking refunds of $1,453.
The new filters, Castor says she was assured, “will flag that.”
While Castor was encouraged by the new IRS approach, she added, “I know from the folks coming to my office with checks and calls and people I see in the grocery store, this is still a huge problem and we’ve got to continue to press the IRS until Tampa no longer is number one for tax fraud.”
Castor said that she was told that by October, the agency will reallocate personnel to beef up the number of people dedicated to issues related to ID theft tax refund fraud. The agency will have more than 2,300 people addressing the issue, Castor said. These people are being moved from other areas and are not new hires.
The agency anticipates that by tax season, it will issue about 500,000 personal identification numbers to identity theft victims. The PIN numbers are designed to stop victims from being further harmed by having their real returns rejected.
The agency said it is “modernizing” its efforts to block use of information gained from the Social Security death master file, an online database of deceased individuals with their Social Security numbers and dates of birth. The data has been used extensively by refund fraud thieves.
Castor said she was pleased to see recent efforts by the federal government to address the fraud, including a directive issued this week by the Justice Department to speed up prosecutions and the arrests of some high-profile suspects.
The congresswoman said she spoke to the IRS about a pilot program in Florida in which identity theft victims can sign waivers giving law enforcement access to tax returns filed fraudulently in their names.
Castor said the IRS told her it has issued 750 of those waivers.
The amount of time it has taken the agency to address the issue is “not satisfactory at all,” Castor said. “But there are some positive signs here. We’ve got their attention.”
Posted on August 31st, 2012 No comments
The sooner medical identity theft is discovered, the more likely damage can be minimized. Physicians, patients, insurers and the government all can help detect it.
When Anne Peters, MD, a Los Angeles-based internist, started receiving phone calls in 2006 from patients who were not hers about medical procedures she didn’t perform or even offer at her practice, she figured out pretty quickly that she had become a victim of medical identity theft.
When Dr. Peters sought advice on how to resolve the situation, she not only came up empty-handed, but she soon started feeling like a criminal herself. She was visited by federal agents, she received notices from the Internal Revenue Service regarding back taxes on $750,000 she never earned, and she was even detained once at the airport for more than an hour when she returned from a trip abroad. Meanwhile, Medicare stopped sending her payments for legitimate claims.
The worst part, she said, was that she couldn’t find anyone to help her figure out what went wrong or how to resolve it. What went wrong was that a sophisticated international crime ring had stolen her medical credentials, set up shop under her name and was illegally bilking Medicare out of hundreds of thousands of dollars.
Six years and countless headaches later, Dr. Peters finally got her name cleared. Because of her experience, Dr. Peters is in demand as a speaker on medical identity theft and helps raise awareness among her colleagues and among federal agents, who have developed programs to help physicians in similar situations.
Medical identity theft is very much on the radar of Medicare and other agencies responsible for investigating identity theft. In recent years, it has become the fastest-growing type of identity theft in the world, according to reports. An estimated 2 million people become victims of identity theft each year. And more than 5,300 physicians have listed themselves in a federal database that tracks medical identity theft. For physicians, the threat is a double whammy.
Only half of U.S. adults have reviewed their medical records, and few have checked for fraud in their record.
There are two types of medical ID theft: the kind that involves a patient’s identity being compromised; and the kind that involves the physician’s professional identifiers being stolen. Both could bring professional or financial harm to physicians.
Problems for physicians could go way beyond the threat of spending more than a year and many thousands of dollars clearing their names when their professional identities are compromised. (A February survey by Ponemon Institute, which studies computer security and identity theft issues, estimates that identity theft victims spend more than $22,000 clearing their names.)
Physicians also face repercussions when their patients’ identities are stolen. Patients report losing trust in their physicians after a medical ID theft has occurred. There is also the potential for medical errors and bad outcomes caused by two patients using the same identity. Physicians also potentially could be subjected to violations of the Health Insurance Portability and Accountability Act if they did not adequately protect the data from being stolen.
Identifying cases of medical ID theft early can help lessen the damage. And it’s easier than one might think to detect it. Many times, the clues are not well-hidden — it’s just that neither physician practices nor patients are connecting the dots.
Physician practices can work with patients, payers, employees and others to help prevent and detect medical ID theft. The biggest key to detection is education, said Shantanu Agrawal, MD, who serves as medical director for the Center for Program Integrity at the Centers for Medicare & Medicaid Services. Many people don’t even know what medical ID theft is, so educating patients on the problem and how to detect it is well worth a physician’s time, he said.
Warning signs for physicians
Dr. Peters’ story was highlighted in a Feb. 1 article in The Journal of the American Medical Association, by Dr. Agrawal and Peter Budetti, MD, JD, that was meant to educate physicians. Dr. Budetti is CMS deputy administrator and director of the agency’s Center for Program Integrity.
Dr. Agrawal said that when physicians receive calls such as the ones Dr. Peters received from patients she knew she never treated, that should be an immediate warning sign.
More than 5,300 physicians have listed themselves in a federal database that tracks medical identity theft.
In addition to educating patients on the importance of reviewing Medicare summary notices and the explanation of benefits documents sent by private insurers, physicians also should review their own Medicare remittance notices to look for services they never performed, or payments they never received. Names that don’t look familiar can be signs that someone is practicing in his or her name, and Medicare should be contacted immediately.
Physicians also can do routine checks of Medicare’s Provider Enrollment, Chain and Ownership System. This will list the practices associated with a physician’s name. If a practice has been set up using the physician’s Medicare identifier, it will show up on that list.
Jeremy Miller, a director at Kroll Advisory Solutions, a security response and mitigation firm, said other warning signs include mailings or phone calls that make reference to corporation filings or businesses under a different name than the actual practice. Other clues are credit reports that show accounts a physician doesn’t recognize.
“Don’t just assume it’s a mistake,” Miller said. “The earlier you capture those kinds of things, the easier it is to get it untangled.”
Physicians also should be aware that many thefts start with employees in the practice, said Bill Fox, senior director of the health care division at LexisNexis Risk Solutions. Some employees have access to passwords or identifiers that could be used to establish a fraudulent practice in the physician’s name. And they have the ability to intercept evidence that the fraud is occurring.
Risks for patients
Even though a large percentage of medical ID thefts that involve a patient using someone else’s insurance credentials to receive care are “Robin Hood” crimes involving willing victims, the consequences still could be devastating to both patients and physicians.
Patients run the risk of receiving improper medical treatment because of someone else’s information being in the medical record and used by physicians to make a treatment decision. And physicians who miss obvious signs that a patient is not who the medical record indicates could be held liable for any harm that was done because of the oversight, said Larry Ponemon, PhD, chair and founder of the Ponemon Institute.
Medical identify theft has become the fastest-growing type of identity theft in the world.
Just as EOB documents are a good way to detect physician medical ID theft, they are also a good way for patients to see whether someone is receiving services using their insurance benefits. But many patients toss these notices aside.
A survey by Harris Interactive conducted on behalf of Nationwide Insurance found that only half of U.S. adults have reviewed their medical records, and only 24% have ever checked for fraud within their records.
It’s well worth a physician’s time to educate patients on the importance of the EOB or Medicare summary notices and how to read them, Dr. Agrawal said.
Practice employees also are a good resource, as they are on the front lines, processing the paperwork of patients who may not be who they say they are. A checklist of things the front desk and physicians can do to thwart identity theft:
- Ask for two pieces of identification. Jorge Rey, information security and compliance director for Kaufman Rossin & Co., an accounting firm in South Florida, said this simple request can be an easy way to sniff out criminals. If the patient has an insurance card but no photo ID, or if a second piece of identification is handed over and it looks fake, or the description doesn’t match the person, consider these as warning signs.
- Ask for a referral source. Rey said simply asking new patients how they heard of the practice can prove beneficial. New patients are generally there because they were referred by another doctor or by a friend. Those referrals, especially ones from other doctors, can be used to establish the person’s identity, if needed.
- Look for inconsistencies in the record. The advancement of health information exchanges will make these crimes harder to pull off, because physicians won’t need prior relationships with patients to know something about them. Having access to patient records from another facility can help physicians identify discrepancies such as dramatic changes in weight or height.
What to do if you suspect something
The first thing physicians should do about potential medical ID theft is to heed the warning signs. If physicians or patients suspect fraud, Dr. Agrawal said, they should call their insurer. Medicare has a toll-free number where potential cases can be reported, and all calls are taken very seriously, he said. Many times these calls result in a new investigation or add information to one in progress.
Similar steps should be taken if the patient is insured through a private plan. The Federal Trade Commission also investigates medical ID theft and has a hotline and website where complaints can be filed. A police report should also be filed, Dr. Agrawal said.
While Dr. Peters never asked nor wanted to become the poster child for medical identity theft, she has taken her role seriously. She uses every available opportunity to educate other physicians about the risks. She urges more focus on prevention.
Medical ID theft is much more complex than other types of financial or identity theft, Ponemon said.
If you lose your credit card, for example, you can call the bank and they will cancel your current card within seconds and send you a new card with a new number. Use of medical identification isn’t as simple to stop, Ponemon said.
“In the world of health care credentials, if you lose your wallet and your credential is gone and you contact your health [insurer], they may send you a card with the same number on it,” Ponemon said. “They don’t really have these anti-fraud procedures in place.”
The key is for health care organizations to have their own anti-fraud procedures and to be vigilant about using them, he said.
Posted on August 30th, 2012 No comments
A small South Florida city has attracted the attention of federal investigators looking into tax refund fraud and identity theft, according to an independent watchdog agency that oversees the Internal Revenue Service.
In Belle Glade, nestled along Lake Okeechobee, 741 tax returns worth more than $1 million in refunds were filed from a single address last year, according to the Treasury Inspector General for Tax Administration.
The Belle Glade address ranked third nationally for number of returns filed. Investigators would not release the address, citing confidentiality rules on tax returns. But House Oversight Subcommittee Chairman Charles Boustany Jr., R-La., referred to it as a home.
Three of the top five addresses used to file potentially fraudulent returns were in Florida, the Inspector General reported.
Tampa and Miami were mentioned as the top cities where potentially fraudulent 2010 tax returns were filed last year.
Nationally, thieves are suspected of using the identities of 2,274 children, 105,000 dead people and almost 1 million people who don’t normally file returns to collect $5.2 billion in refunds.
The Inspector General’s analysis found that incidents of identity theft jumped 155 percent last year.
“The report really underscores just how bad a problem ID tax fraud is in Florida and around the country,” said U.S. Sen. Bill Nelson, who asked the Treasury Inspector General last year to investigate the extent of the problem. “It’s become an epidemic that’s costing law-abiding U.S. taxpayers billions of dollars. And it’s one we’ve got to fix. That’s why I’ve filed legislation aimed at putting a stop to these fraudsters.”
The IRS disputed some of the watchdog’s findings, including estimates of $21 billion in potentially fraudulent tax returns in the next five years.
Plantation IRS spokesman Mike Dobzinski said Monday that his agency “along with the Department of Justice, has significantly stepped up its activities to pursue those who attempt to steal identities to commit tax fraud.” That will help cut down on future abuse, he said.
But Rep. Boustany was concerned that the IRS wasn’t spotting suspicious multiple filings at one address.
In addition to the Belle Glade home, an Orlando post office box allegedly received $1,088,691 for 703 suspected fraudulent tax returns filed, he said. A home in Tampa netted even steeper refunds: It allegedly sent out 518 potentially fraudulent fake returns but collected nearly $1.8 million from Uncle Sam, Boustany said.
David Barnes, public affairs liaison of the Treasury Inspector General for Tax Administration, said his agency “did not analyze the fraud by geographic or metropolitan location.” So he said he couldn’t comment on why the state — and South Florida in particular — leads the nation in identity theft.
His agency’s report showed, for example, that Miami thieves allegedly submitted nearly 75,000 bogus tax returns last year and received nearly $281 million in refunds.
It is “one of the biggest constituent problems we see in our office,” said alex Conant, a spokesman for U.S. Sen. Marco Rubio. The tax fraud “often prevents law-abiding taxpayers from receiving the tax refunds they deserve.”
“Over the past several years my office has seen a dramatic increase in the number of individuals needing assistance because of tax refund identity theft, a clear indication this crime is becoming a big problem in South Florida,” added U.S. Rep. Debbie Wasserman Schultz, of Weston. That’s why she said she introduced a bill to help stop this problem and protect Americans.
Florida IRS spokesman Dobzinski said his agency is working hard to stop the fraud. This January, the IRS and Justice Department worked together to press 923 charges against 105 people in 23 states.
“To support our prevention efforts, we enhanced our return processing filters to improve our ability to identify false returns and stop fraudulent refunds from being issued,” he added.
The IRS also established a specialized unit that analyzes and develops leads on identity theft, Dobzinski said.
But others are skeptical with several South Florida tax preparers saying tax-related identity theft is up even more this year than last.
“We need to know why the IRS is not catching this fraud,” Rep. Boustany said.
Posted on August 30th, 2012 No comments
The Internal Revenue Service may have delivered more than $5 billion in refund checks to identity thieves who filed fraudulent tax returns for 2011, Treasury Department investigators said on August 2, 2012. They estimate another $21 billion could make its way to ID thieves’ pockets over the next five years.
The IRS is detecting far fewer fraudulent tax refund claims than actually occur, according to a government audit that warned the widespread problem could undermine public trust in the U.S. tax system. Although the IRS detected about 940,000 fraudulent returns for last year claiming $6.5 billion in refunds, there were potentially another 1.5 million undetected cases of thieves seeking refunds after assuming the identity of a dead person, child or someone else who normally wouldn’t file a tax return.
In one example, investigators found a single address in Lansing, Mich., that was used to file 2,137 separate tax returns. The IRS issued more than $3.3 million in refunds to that address. Three addresses in Florida, the epicenter of the identity theft crisis, filed more than 500 returns totaling more than $1 million in refunds for each address.
In another troubling scenario, hundreds of refunds were deposited into the same bank account – a red flag for investigators searching for ID thieves who may be filing for refunds for multiple people. In one instance, the IRS deposited 590 refunds totaling more than $900,000 into one account.
“We found multiple reasons for the IRS’s inability to detect billions of dollars in fraud,” J. Russell George, the Treasury Department’s inspector general for tax administration, in a statement. “At a time when every dollar counts, these results are extremely troubling.”
Topping the list of concerns is the IRS’s lack of timely access to third-party information it needs to verify returns and root out fraud.
Many Americans are struggling to pay their bills and the IRS takes pride in processing returns and issuing refunds promptly. But taxpayers can start filing their returns in mid-January, while employers and financial institutions don’t have to submit withholding and income documents for taxpayers to the IRS until the end of March. That means the IRS often issues refunds long before it can confirm the veracity of what’s listed on taxpayer returns.
Thieves are also exploiting vulnerabilities in the way the IRS delivers refunds, investigators found. Of the 1.5 million undetected cases of potential fraud, 1.2 million used direct deposits, including pre-loaded debit cards. Thieves often prefer those methods to a paper check, which require a physical address to receive the check and photo ID matching the taxpayer’s name to cash it.
IRS officials said the growth of identity theft-related fraud is one of its biggest challenges. Already this year, the agency has stopped almost $12 billion in confirmed fraud, it says. And it says its criminal investigators are actively pursuing those who perpetrate fraud – including the previously undetected cases identified by the audit.
“If the IRS determines a refund has been issued improperly, we will attempt to recoup the funds,” said IRS spokeswoman Michelle Eldridge.
The IRS agreed with the inspector general that Congress should expand the agency’s access to resources that could help it fight theft, including the National Directory of New Hires, a database created to help states enforce child support orders. The IRS specifically asked Congress for that authority in its 2013 budget request.
But IRS officials disputed the notion that $21 billion in fraudulent returns could be issued over the next five years, arguing that the estimate didn’t take into account the IRS’s stepped-up compliance and prevention efforts.
“We’re going to continue to monitor the IRS in this area until we see some improvement,” Michael McKenney, the acting deputy inspector general for audit, told The Associated Press.
Investigators went back through a sample of the 1.5 billion undetected cases to see why the IRS never flagged them as fraudulent. In 49 of 60 returns, investigators said, the return didn’t score high enough on the IRS’s fraud filter to merit a closer review. In eight of the 11 cases where the IRS did perform an additional review, it never verified the income and withholding on the return.
The audit was prompted by a request from Florida Sen. Bill Nelson, whose home state contains the top two cities where fraudulent tax returns originate: Tampa and Miami. Last week Nelson, a Democrat, joined with Republican Sen. Tom Coburn of Oklahoma to introduce legislation designed to curb identity theft in the tax system.
“It’s an ongoing problem,” Nelson said in a statement. “We’ve got to find a fix.”
Nelson’s bill would improve protections for Social Security numbers that thieves need to file returns, and would expand an existing program that gives previous victims of ID theft a personal identification number to deter repeat offenses against the same taxpayer. Another bipartisan bill passed by the House on Wednesday would bolster prosecutions and strengthen criminal penalties on ID thieves.
The IRS said it is already putting a number of new measures in place, including new ID theft screening filters that will hold on to refunds until the IRS can verify a taxpayer’s identity. That filter had thwarted about $1.3 billion in potentially fraudulent refunds through April, the audit said. Another system flags returns filed with Social Security numbers of those who have died.
For those who fall victim to identity thieves, the recovery process can be less than smooth. A separate report by the inspector general in May found that the IRS wasn’t providing good customer service and proper assistance to victims of ID theft, increasing the burden for those whose identities are stolen. The Federal Trade Commission has listed identity theft as the No. 1 consumer complaint for the past 12 years.