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.