Posts Tagged ‘Identity.Theft’

Newer Entries »

“The IRS Has Failed to Provide Effective and Timely Assistance to Victims of Identity Theft”

Wednesday, January 9th, 2013

That’s not just my opinion, it’s the opinion of the National Taxpayer Advocate, Nina Olson. Most tax professionals who have run into identity theft can relate horror stories. Jason Dinesen, an Enrolled Agent in Iowa, has been dealing with an identity theft matter for over 20 months (that’s nearly two years). The matter is still unresolved.

Ms. Olson today came to the conclusion that:

■■ The IRS is moving backward — away from a centralized approach to assisting identity theft victims — and is increasing the risk that taxpayer-victims may fall through the cracks;
■■ After years of ineffective efforts to reengineer its processes, the IRS still takes too long to fully resolve the accounts of victims;
■■ While the Identity Protection Personal Identification Number (IP PIN) that the IRS has developed provides additional security, it does not cover all victims;
■■ The Taxpayer Protection Unit may not be sufficiently staffed to handle the volume of calls from impacted taxpayers;
■■ Congress may unnecessarily create additional exceptions to taxpayer privacy protections; and
■■ The Social Security Administration still makes the Death Master File available to the public, creating an opportunity for identity thieves to steal and then misuse personal information.

The IRS and the Taxpayer Advocate both have reasonable arguments; the report (linked to above) notes both sets of issues. But I think Ms. Olsen misses a key point: The place to stop identity theft is checking addresses when returns are filed. The proposal that I made back in September would stop some identity theft before it happens. An ounce of prevention is worth a pound of cure.

Ms. Olson hits a bullseye with her comments on the Social Security Death Master File; she sees no reason for that to be available to the public while the social security numbers could be used for identity theft. I agree completely. The government is handing to crooks information they need to be crooks.

Finally, Ms. Olson’s comments about the length of time it takes to resolve many identity theft claims are accurate. The cases take a long time. They are complex. That said, many individuals are waiting years to get matters resolved. This is a disservice to an agency that has “service” in their name.

Tags:, , ,
Posted in IRS | 1 Comment »

“First Lady” of Tax Fraud Indicted for Fraud

Thursday, December 20th, 2012

We have a late entry for the 2012 Tax Offender of the Year. Rashia Wilson bragged on her Facebook page, something that many individuals do. But it’s what she said that likely got her in trouble. According to the Tampa Bay Times, Ms. Wilson said,

“I’m Rashia, the queen of IRS tax fraud,” Wilson said May 22 on her Facebook page, according to investigators. “I’m a millionaire for the record. So if you think that indicting me will be easy, it won’t. I promise you. I won’t do no time, dumb b——.”

She may have been correct: It took a little over six months for her to be indicted.

Technically, she hasn’t been indicted for tax fraud. The 57 counts she and her boyfriend, Maurice Larry, face include conspiracy, wire fraud, filing false tax returns, theft of government property, and aggravated identity theft. The pair are looking at very lengthy terms at ClubFed if found guilty of all charges. The government is also seeking a money judgment in the amount of $1,176,787.00; that’s how much the pair allegedly profited from their scheme.

This is not Ms. Wilson’s first brush with law enforcement. She was arrested in September on a weapons charge.

While this alleged tax fraud ring is based in Florida, it apparently may have received information on identities in California. A story in the San Francisco Chronicle noted that 931 Berkeley residents may have had their identities stolen by this ring. The Chronicle story also notes that Ms. Wilson hosted “tax fraud parties” that allegedly raised more money than drug dealing.

A hint to those who want to begin a life of crime: Don’t brag about it on Facebook. Yes, law enforcement does read the Internet.

Tags:
Posted in Florida, Tax Fraud | 1 Comment »

Why Rob Banks?

Friday, December 7th, 2012

Question: “Why do you rob banks, Mr. Sutton?”

Answer: “Because that’s where the money is.”

It’s debatable whether or not legendary bank robber Willie Sutton ever said that. However, the idea of only robbing something that has money is a good one (for the robber). Today, the question might be asked, “Why do you commit identity theft?”

Another gang of identity thieves was caught yesterday. From Long Beach, California comes word that eleven gang members were arrested. The investigation began as the result of a shooting. Investigators discovered that gang members had switched from violent crime to nonviolent identity theft and filing false tax returns. The reason is obvious to me: It’s an easy way of making an illegal income.

A large list of agencies was involved in yesterday’s arrests, including the Secret Service and the US Postal Inspectors. Noticeably absent from that list was the IRS Criminal Investigation unit. Clearly, tax fraud was committed but it took outside agencies (that is, outside of the IRS) to discover and prosecute the crimes.

True, those arrested may face federal charges (they were booked on state charges only yesterday), and those eleven alleged identity thieves are unlikely to be committing any more identity thefts anytime soon. However, until the IRS implements better procedures (such as the suggestions I made earlier this year), more and more criminals will attempt to commit this crime. That’s because there’s lots of money to be made here.

Tags:
Posted in IRS, Tax Fraud | 2 Comments »

Can We Kill the Death Master File?

Monday, November 26th, 2012

Years ago, having the Social Security Administration publish a “Death Master File” was probably necessary. This may have been the only manner for various government agencies and insurance companies to learn that individuals had passed on.

Today, though, the information should only be disseminated to those who need it. Insurance companies should be able to subscribe to the list (as well as government agencies). However, is there any reason why John and Jane Doe need to have access to the list?

Well, one reason the Does need access is to commit identity theft: Three Utah men are accused of using the Death Master File for just that purpose. The men then created fake documents from phony employers to obtain tax refunds. The refunds reportedly were on the small side ($1,046 to $2,624). In any case, the IRS discovered the scheme and the men are now facing numerous charges of false claims, wire fraud, and aggravated identity theft.

While these three alleged identity thieves were caught, many more are finding the US government a great source of revenue while ruining the lives of innocent taxpayers. (Jason Dinesen, an EA from Indianola, Iowa, has run a story about a woman who is dealing with identity theft related to her late husband. This is almost certainly another case which stems from the Death Master File.) Identity theft makes the lives of victims miserable for years and is far too easy a crime for the thieves to commit. Ending the sale of information from the Death Master File would be a nice start to combating identity theft.

Tags:,
Posted in IRS, Utah | 1 Comment »

Woman Paid for Stealing Identities

Sunday, October 28th, 2012

Angeline Austin of Troy, Alabama worked for Southern Records Management. She was assigned by her employer to Troy Hospital. Ms. Austin felt the need for additional income. Unlike most of us who would actually obtain a second job, Ms. Austin made money the new-fashioned way: She committed a crime.

Ms. Austin’s work at Troy Hospital gave her access to patient records, including names, addresses, and social security numbers. She sold over 800 of those identities; they were subsequently used on tax returns claiming refunds, with the proceeds making their way to a co-conspirator. As the news story notes, “Austin pleaded guilty to one count of conspiring to defraud the government regarding claims, one count of fraud in connection with identification documents, one count of fraud with computers and one count of aggravated identity theft.”

Unfortunately, identity theft leads to easy money for criminals. The IRS and other government agencies are being purely reactive at this point. Hopefully the IRS will consider some logical methods that would put a crimp in this growing crime.

Tags:
Posted in IRS | Comments Closed

A Modest Proposal on Tax-Related Identity Theft

Sunday, September 9th, 2012

The issue of identity theft is growing. The IRS is faced with twin challenges on this front: The IRS needs to quickly process tax refunds but it also needs to combat this growing issue. The IRS’s current policy is to process the first return it sees with a given social security number and hold up processing on the second return. The major issue with this is that the second return is usually the correct return.

Consider hypothetical taxpayers, George & Jane Jetson. Mr. & Mrs. Jetson filed their tax return last year with, say, a Las Vegas address. Come January 17th, enterprising crooks in Tampa, Florida who have somehow stolen the Jetsons’ identity file a return claiming a refund. (I chose Tampa because it’s a hotbed of tax-related identity theft.) The IRS mails a refund check to the crooks (or direct deposits it). Weeks later, the Jetsons file their real return and the problem is uncovered.

I have a possible solution to this issue. The IRS should check the address of every filed return versus the address on file for the taxpayer. If the Jetsons’ return is filed with the same address as used last year, it’s likely the return is legitimate. If not, then the IRS should put a hold on processing the return, and send a letter to the taxpayers at the address used in the prior year (with forwarding requested). The letter would note that the IRS received a return from the taxpayers, but the address does not match the address on file with the IRS. The letter would further state that processing of the tax return is being held awaiting confirmation of the address change. (The post office does this with all submitted change of address forms; there’s no reason why the IRS can’t do this, too.)

If the filed return is valid–the taxpayers moved but did not inform the IRS–the taxpayers would be given a number to call where they could input some information from the prior return and the processing of the return would resume. If the filed return is not valid, the taxpayers would have a different number to call and the IRS would be able to quickly move after the probable crooks.

There is a second part to this program that would be necessary. The IRS would need to send confirming notices to individuals who send in Change of Address forms to the IRS. The reason for this is if this program is implemented, identity thieves would just submit Form 8822 and change the address. The confirming notice would ask the taxpayer to dial a specific phone number, input a code that’s on the letter, and then the change of address would be processed. The confirming notice would be sent to the address on file, of course.

I can see a few kinks with this proposal. For example, people who have been out of the system for some time would have issues. A second issue will be where an identity thief uses the correct address but has chosen direct deposit. Still, my proposal should stop a large percentage of tax-related identity theft. It would have the side benefit of forcing individuals and businesses to send change of address forms into the IRS. There would be some delays to taxpayers who have moved and have not informed the IRS, but that’s the only major drawback that I see in this system.

Overall, my proposal seems to me to be a solution that should be relatively easy to program into the IRS’s computers. And unless I’m missing something, it should stop a lot of tax-related identity theft.

Tags:
Posted in IRS | 5 Comments »

Joseph Pleads Guilty

Monday, September 3rd, 2012

Back in May I wrote about William Joseph, the former NFL player caught in an identity theft ring that was broken through an FBI sting. Mr. Joseph pleaded guilty last week to tax fraud. Mr. Joseph’s attorney, Roderick Vereen, told the Miami Herald, “He recognizes the mistake he made, and he is going to take responsibility for his actions and do what he can to repair his good name.” Hopefully, Mr. Joseph will make good on that statement.

Tags:
Posted in Tax Fraud | 1 Comment »

A Story of Identity Theft; Why Is the Death Master File Still Available?

Sunday, August 26th, 2012

My father died almost six years ago. It’s something that’s inevitable for all of us. My mother was lucky in one respect: No one stole my father’s identity at death. Unfortunately, such identity thefts are becoming far more common.

Jason Dinesen, an Enrolled Agent in Iowa, ran a seven-part story in his blog relating the identity theft of a young widow’s late husband. He has four conclusions (all of which are valid imho). I’m going to focus on the last one:

Congress needs to do something to fix the problem with the Death Master File. It’s ridiculous that the government publishes something that is such a goldmine for identity theft.

I’ll add another story of identity theft. My partner’s stepfather passed away last January. When we filed his 2010 tax return we discovered that he was a victim of identity theft. Someone from Tampa, Florida (hundreds of miles away from where the stepfather lived) filed a tax return using his name and social security number. We both asked ourselves how in the world did a Tampa resident get the name and social security number? There were absolutely no connections between the stepfather and Florida. We both thought that the most likely means was the Death Master File.

So you’re asking, what is the Death Master File? Well, you can find it on the Internet.
 While a single search costs about $10, you can search 1 million names for $12,000. If I’m a crook and I want to do some identity theft, I don’t need that many names. I could just do 5,000 for only $1,500. If each of my 5,000 phony tax returns nets me $1,500, I’ll have a very nice rate of return.

Mind you, I can see that there are legitimate purposes for the Death Master File. When I initially became an IRS e-service provider I went through a background check. At a minimum, such checks should be required for subscribers to the Death Master File.

Identity theft is a growing crime. To have the government assisting in the crime is horrible. Yet that’s exactly what’s happening today.

Tags:, ,
Posted in IRS | 2 Comments »

Eight Sacked, Including Two from the NFL

Tuesday, May 1st, 2012

The storefront in North Miami cashed checks. There’s nothing that unusual in that. However, there were two major differences between the storefront in Miami and most check cashing locations: The store charged very high fees (35%-45%) but didn’t ask questions about the checks that were cashed and it was operated as a sting operation by the FBI. Eight individuals, including two former NFL players, were arrested today on mostly tax related and identity theft charges.

From the DOJ Press release:

More specifically, [seven of] the defendants are charged with forgery of U.S. Treasury checks, in violation of Title 18, United States Code, Section 510, theft of government money, in violation of Title 18, United States Code, Section 641, and use of five or more identification documents with unlawful intent, in violation of Title 18, Untied States Code, Section 1028(a)(3).

The two former NFL players are William Joseph, who started his career with the New York Giants and ended his career in Oakland with the Raiders and Michael Bennett, who started his career with the Minnesota Vikings and also ended his career with the Raiders. Mr. Bennett, though, was sacked on different charges.

Mr. Bennett went to the storefront and asked for a loan, showing what purported to be $9 million of collateral in a bank account with UBS. The trouble was the balance in the account was $9 million less than what Mr. Bennett showed at the store (the account allegedly had no funds in it). Oops. Mr. Bennett has been charged with wire fraud.

Most of the defendants are accused of cashing between 11 and 35 fraudulently obtained tax refund checks. I am seeing and hearing more examples of identity theft; as noted in the DOJ press release,

U.S. Attorney Wifredo A. Ferrer stated, “Not only is identity theft America’s fastest-growing crime, it’s also a consumer’s worst nightmare. Most recently, identity theft has become a taxpayer’s worst nightmare also. As this three month undercover operation illustrates, identity thieves are using stolen identities to commit steal tax refunds from legitimate taxpayers. Identity theft, when combined with tax refund schemes, threatens the financial security of our citizens. It is time for tax refund scammers to realize that we will not allow them to steal others’ identities and line their pockets through fraud.”

As John V. Gillies, Special Agent in Charge of the FBI’s Miami Division, stated, “Without proper safeguards, identity theft tax fraud has become a growing epidemic.” Hopefully, these arrests are not the end of the FBI and DOJ actions against identity theft criminals.

News Story (Miami Herald)

Tags:
Posted in Florida, IRS | 3 Comments »

Newer Entries »