Tax Refund Fraud Spreads to Puerto Rico

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Many Americans wait to file their tax returns until the week prior to the deadline. However, con artists are generally not procrastinators and jump at the chance to file fake returns on time and even collect refunds in other taxpayers’ names, whether living or dead. (Fraudsters are so opportunistic.) According to an article from The Whittier Times, tax refund fraud cases are not only growing within U.S. borders, but also in a new hot spot—Puerto Rico.

The article states that a 52-year old man, who was part of a ring that filed more than 1,000 fake federal tax returns, was found guilty of using names and Social Security numbers (SSNs) of Puerto Rican citizens to illegally collect millions of dollars. He personally cashed tax refund checks worth more than $1.3 million. (Talk about making a lot of hay while the Puerto Rican sun was shining.) The fraudster and his co-conspirators used false, out-of-state drivers’ licenses to obtain private mail boxes to receive the tax refund checks. The man also pleaded guilty to identity theft for using a dead man’s personal identification information to obtain a U.S. passport.

Although Puerto Rico is a U.S. territory, citizens do not have to pay federal income tax. If a tax return is submitted, it appears to the IRS that the citizen filing the return has moved to the continental U.S. and is employed. Previously, these SSNs have not been used to file federal returns, so they are new to the IRS system. This makes the identification of duplicate returns harder if no prior record exists for tax returns filed under a specific SSN.

So what happened with the con artist? He was sentenced to four-and-a-half years in federal prison and ordered to pay $1,320,566 in restitution to the IRS. (No more sparkling sandy beaches and beautiful sunsets in the near future.)

Tax refund fraud affects many innocent people and costs the U.S. billions of dollars a year. Not only do many people with stolen identities have to deal with the ramifications of having their personal information compromised, but tax refund fraud is also a crime against American taxpayers. Fraudulent federal tax refunds come out of the U.S. Treasury, which means there is less money available to fund programs and services that benefit American citizens.

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Downey Man Sentenced in Tax Fraud Cashed More than $1.3 Million in Refund Checks Based on Fake Returns,” published in The Whittier Daily News on March 19, 2013.

LOS ANGELES — A Downey man was sentenced Monday to 54 months in a federal prison after he was found guilty of cashing more than $1.3 million in tax refund checks based on fake returns, according to the Department of Justice.

William Gomez-Corzo, 52, also known as William Perez, was part of a ring that filed more than 1,000 fake returns using names and social security numbers of Puerto Rico residents worth millions of dollars.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.