Officials are cracking down on any individuals found guilty in connection with tax refund fraud cases.   According to today’s Fraud of the Day from, two Florida residents discovered the hard way that the Department of Justice is making no exceptions.  The article reports that two defendants are the last of nine defendants to be sentenced for conspiracy in connection with a tax refund fraud case.  The nine fraudsters filed more than 350 fraudulent federal income tax returns between 2008 and 2011, seeking more than $2.4 million in refunds.    So, how did their scam work?  (The old fashioned way, of course) The group created phony taxpayer ID numbers; used personal identification information from both the living and deceased and added fictitious information about employers, dependents and even tax withholding amounts.

Earlier this year, seven of the nine fraudsters pleaded guilty to the conspiracy.  These last two defendants were sentenced in this case – one to 70 months in federal prison and the other to 33 months.  

The United States Attorney for the Northern District of Florida, who prosecuted the cases, expressed the office’s gratitude to the Internal Revenue Service – Criminal Investigation Team, United States Secret Service, the Bureau of Alcohol, Tobacco, Firearms and Explosives, as well as various state and local Florida law enforcement officials for the search and conviction efforts made in this case.  (I love seeing the cooperation among agencies to nab fraudsters!)

Although all individuals have been convicted, it is the victims who truly suffer.  They must now reclaim their stolen identities – all while waiting for their rightful refund.  And, let’s not forget the taxpayers.  We’ll now pay the refunds to the legitimate recipients.  Obviously, that’s the right thing to do.  But, we’ve already paid the refunds to the fraudsters.   What are the odds that the Treasury will ever see that money again?

In hindsight, could these fraudsters have been stopped in their tracks?  Yes.  The use of phony tax ID numbers, stolen or deceased identities and other fake information are all data points that would have raised red flags to a system that leveraged the use of public records and data analytics technology to detect fraud.

So, here’s the question for the day:  is your revenue agency using an identity-based filter to detect fraud?

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