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About Stolen Identity Refund Fraud [SIRF]
[By Children’s Home Society of Florida Foundation]
The IRS, the Justice Department and Congress all recognize that stolen identity refund fraud (SIRF) is a major and growing problem. With the increase in electronic filing, individuals are obtaining the Social Security numbers and names of other persons and filing to claim their tax refunds. The Justice Department estimates that there could be up to $26 billion in fraudulent refunds over the next five years.
Assistant Attorney General Kathryn Keneally of the Tax Division of the Justice Department conducted a briefing on September 27 in Washington. She acknowledged, “The stolen identity refund fraud cases present a different kind of crime than we usually see.” Keneally continued and explained the depth of the problem. Treasury officials understand that greater efforts are needed by the IRS, Department of Justice and U.S. Attorney’s Office to confront the problem.
How Identity Thieves Work
How do most identity thieves operate? The essential information for an identity thief is a name and a Social Security number. There are at least three ways that identity thieves are collecting this information and receiving tax refunds.
- First, some have persuaded a postal employee to intercept multiple refunds to an address.
- A second strategy might involve the use of a doorman to direct refund checks to the identity thief.
- Third, bank tellers have been bribed to collect the personal information necessary for the identity thief to file and obtain a fraudulent refund.
Geographic Dispersion
Two areas of the country are particularly affected. Southern District of Florida U.S. Attorney Wilfredo Ferrer acknowledged the problem there. He stated, “This is the fastest growing and most insidious fraud in this district right now. It’s sort of like the crime du jour.” He is regularly finding victims “from all walks of life” who had their identities stolen so the thief could collect a “bogus tax refund.” Ferrer disclosed that there are even victims who work in the office of the U.S. Attorney.
Another area with a significant problem is the Southern District of New York. Deputy U.S. Attorney Richard Zabel pointed out that many New York thieves are involved in tax fraud. He stated, “It’s like Willy Sutton – Why do you rob banks? Because … that’s where the money is!
Well, if you’re doing identity theft, the big money is in the Federal Government’s bank account.”
e-Filing Challenges
The IRS recognizes the challenge with eFiling. On the one hand, the IRS has greatly improved the speed of refunds for lawful taxpayers who eFile. In addition, the eFiling of tens of millions of tax returns saves a huge amount of time and cost for the government in processing tax returns.
However, the challenge with eFiling is that the thieves are able to obtain information and file before the legitimate taxpayer. By the time the actual taxpayer files, the thief has received the refund. In some cases, thieves have promptly transferred the funds outside of the United States.
Large Scale Networks
Some thieves are operating on a fairly large scale. Attorney Zabel referred to one case in New York in 2009. Two individuals filed 7,000 false returns and requested a total of $72 million in refunds. Because the refunds were sent to the same address, the fraud was discovered.
Congressional Legislation
Congress has several bills under consideration that would address the problem. Keneally noted that there are also several regional tax task forces that are moving forward to find and prosecute identity thieves. The Department of Treasury, Department of Justice and the U.S. Attorney’s offices are all cooperating.
Assessment
In addition, the IRS is updating its computer software. If there are multiple refunds to one address or indications that the refund may not be appropriate, the software will “flag” the return for greater review.
Conclusion
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Filed under: Risk Management, Taxation | Tagged: eFiling, fraud, IRS, Kathryn Keneally, stolen identity refund fraud, tax fraug, Wilfredo Ferrer |
The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants 
IRS Should Crack-Down on … Itself
Did you know that, just today, Senate Republican Mitch McConnell called the burgeoning IRS scandal “just one example of an administration-wide effort to silence critics.”
“The Obama effort to shut up opponents isn’t limited to the IRS,” he told conservative outlet Breitbart News.
“It applies to the FCC [Federal Communications Commission], SEC [Securities and Exchange Commission], FEC [Federal Elections Commission], HHS [Department of Health and Human Services].”
Gosh … the IRS, SEC, HHS and FCC … what a government? Any thoughts on these ME-P topics?
Lincoln
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Good Morning!
I wanted to share the following information with you.
IRS has published several fact sheets dealing with identity theft and refund fraud.
FS-2014-1 (irs.gov/uac/Newsroom/ IRS-Combats-Identity-Theft-and-Refund- Fraud-on-Many-Fronts-2014) covers efforts IRS has undertaken to combat the problem. The agency has already assigned more than 3,000 employees to work on identity theft-related issues. This fact sheet discusses refund fraud detection and prevention, increasing efforts to assist victims, and the work of IRS Criminal Investigation.
FS-2014-2 (irs.gov/uac/Newsroom/Tips-for-Taxpayers,-Victims-about-Identity-Theft-and-Tax-Returns-2014 ) offers tips for taxpayers and victims about identity theft and tax returns. This fact sheet notes that taxpayers can encounter identity theft involving their tax returns in several ways. For example, identity thieves can try filing fraudulent refund claims using another person’s identifying information, which has been stolen. “Innocent taxpayers are victimized because their refunds are delayed,” it says.
FS-2014-3 (irs.gov/uac/Newsroom/IRS-Criminal-Investigation-Combats-Identity-Theft-Refund-Fraud ) stresses that “the investigative work done by Criminal Investigation is a major component of the IRS’s efforts to combat tax-related identity theft.” According to IRS, in fiscal year 2013, the agency initiated some 1,500 identity theft-related criminal investigations, an increase of 66% over investigations initiated in FY 2012. Direct investigative time applied to identity theft-related investigations has increased more than 200% over the last two years This fact sheet highlights various IRS enforcement efforts, including the following – identity theft enforcement sweeps; the Law Enforcement Assistance Program; the Identity Theft Clearinghouse; a data processing center identity theft victims list process; and multi-agency task forces and working groups.
Happy New Year!
Bobby Whirley CPA
Whirley & Associates, LLC + ProActive Advisory
[certified public accountants]
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Docs as ID Theft and Fraud Victims
Many doctors and other health care professionals across the United States are reporting identity theft by criminals who used their personal information to file false tax returns and obtain refunds.
http://www.njherald.com/story/25466712/doctors-nationwide-victimized-in-id-theft-fraud
Donald
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IRS
Fighting identity theft is an ongoing battle as identity thieves continue to create new ways of stealing personal information and using it for their gain. Identity theft cases are among the most complex handled by the IRS. If you were the victim of identity theft in the past, the IRS will assign to you annually an IP PIN (IRS Identity Protection PIN) which is a unique six digit number to use when filing federal income tax returns. This PIN proves to the IRS that the taxpayer is the rightful filer of the return.
If you have been the victim of identity theft, please be on the lookout for this piece of correspondence from the IRS. You will receive it through the mail. Make sure you provide this number to us when submitting your tax information.
This year the IRS is using an online process through http://www.IRS.gov which will allow taxpayers with an IP PIN requirement who lose their IP PIN to create an account on-line to receive the IP PIN.
If you suspect that you are the victim of identity theft or if the IRS has notified you via mail that your account has been compromised, please contact your CPA as soon as possible. Please remember that the IRS will never contact you via email and the IRS will not contact you on the phone without initial written communication and an assignment of a specific revenue officer first.
If you receive suspicious emails or phone calls, please do not provide to them any information.
Cindy Freking CPA
[Whirley & Associates, LLC + ProActive Advisory]
11675 Rainwater Drive, (Bldg 6)
Suite 430
Alpharetta, GA 30009-8694
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IRS’ Flawed Authentication Process May Expose PINs
A chilling report.
http://wealthmanagement.com/technology/irs-flawed-authentication-process-may-expose-pins?NL=WM-27&Issue=WM-27_20160219_WM-27_215&sfvc4enews=42&cl=article_4&utm_rid=CPG09000002702210&utm_campaign=5084&utm_medium=email&elq2=dbe5d673cf2a497b9c8c23f3cfde6546
Milton
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