Tis the Season for Tax Fraud

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39203350 - filing taxes online using a computer and being audited

The Internal Revenue Service (IRS) considers Stolen Identity Refund Fraud (SIRF) to be at the top of the list for tax fraud in addition to a host of other scams that can be just as damaging. As American taxpayers prepare to submit their tax returns this tax season, it’s important to protect yourself from these schemes. Today’s ”Fraud of the Day” looks at a man who submitted more than a quarter of a million dollars in fraudulent tax returns using stolen information. (Unfortunately, his victims were unaware that their identities had been stolen and used for illegal purposes.)

SIRF is hard to guard against since your personal information is everywhere. Although you may think your identity is safe, it only takes one bad actor to cause a data breach that can impact your financial security and safety. SIRF occurs when a criminal uses your stolen personal information, such as a Social Security number, employment or dependent information, or W-2’s to file a fraudulent tax return. They have just enough information to make the return look legitimate, then they submit the return with information that directs any refunds into the criminal’s bank account instead of yours. (Remember to file early because if the bad guy’s return is submitted before you get yours in, they could delay your refund and cause issues with you receiving yours in a timely manner.)

A 33-year-old man used stolen identities to file more than $250,000 worth of federal income tax returns in their names. During the defendant’s trial, witnesses testified that they had never authorized the man to file tax returns on their behalf and did not know he was doing so. An IRS official also testified that the fraudster had claimed wages from employers that none of his victims had ever worked for. He also directed the fraudulent refunds to be deposited into bank accounts that he controlled.

It took the fraudster until the third day of the trial to plead guilty to filing false tax claims exceeding more than $250,000. He was sentenced to two years in prison and must pay $183,000 in restitution to the IRS. (Congrats to the IRS for putting a stop to this fraudster!)

While it’s hard to have control over situations where your personal information may be stolen, there are a variety of tips you can follow that may be helpful in preventing this type of fraud from occurring. Check out these resources provided by the IRS and the Identity Theft Resource Center to learn more about the warning signs of tax-related identity theft and what to do if it happens to you.

Source: Today’s ”Fraud of the Day” is based on an article entitled, ”Detroit Man Sentenced in $250,000+ Income Tax Fraud,” published by The Detroit Patch on November 2, 2016.

DETROIT, MI – A Detroit man was sentenced Wednesday to two years in federal prison and ordered to pay more than $183,000 in restitution on charges that he stole the identities of others and filed federal income tax returns in their names, the Justice Department said.

Deandre Elliott, 33, was indicted earlier this year and was in the third day of a trial when he pleaded guilty to filing false tax claims exceeding more than $250,000, according to a news release from U.S. Attorney Barbara L. McQuade.

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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.