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Thieves steal identities, file returns using real taxpayer's name
NORTH MIAMI BEACH, Florida (CNN) - Criminals across the country are raking in billions of dollars in tax refunds through a new and brazen form of fraud that takes advantage of the IRS's fast online returns, law enforcement officials say.
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Tax Tips for Procrastinators
Using laptops and free Wi-Fi connections, criminals are stealing identities and using the names of legitimate taxpayers to file fraudulent online tax returns. They've raked in billions, buying luxury cars, expensive jewelry and plastic surgery, police said.
"It's like the federal government is putting crack cocaine in candy machines," said Detective Craig Catlin of the North Miami Beach, Fla., Police Department. "It's that easy."
First, thieves obtain Social Security numbers and other personal information from insiders at hospitals, doctor's offices, car dealerships or anywhere the information is stored. Then, they file an online tax return using the real taxpayer's name and a fictitious income. In most cases, the criminals buy a debit card so the IRS can issue the refund on that card, although some thieves have also gotten their returns on actual Treasury checks.
The thieves know that the IRS does not verify the employer W-2s sent with the return until after the refund is issued.
It is a particular problem in the state of Florida, according to law enforcement officials.
"We can't go ... two days in a row without making a traffic stop, and there's going to be tax return fraud in the car," Catlin said. "We could stop an 18-year-old kid who's got five (debit) cards. The average is $5,000 per card. So they'll have $25,000, which is really cash, even though it's on debit cards."
And it's not just small-time criminals, he said.
"We have other cases that range up to $100 million where subjects have opened up corporations and bank accounts and business accounts," Catlin said. "And they're receiving millions of dollars from the IRS that are all fraudulent."
Last year, North Miami Beach police arrested the leader of the "Money Avenue" gang that they say specializes in tax return fraud. When police searched his home, they found about $250,000 in debit cards "just sitting on the dining room table for that week's worth of work," Catlin said.
"And inside his closet, there were nine to 10 spiral notebooks, ledgers of names, Social Security numbers, and dates of birth and the dollar amounts of returns that they've done on 3,000 victims," he added.
It's a crime that has replaced drug dealing in many neighborhoods.
"They're sitting on a computer or iPad; they're doing a return with a stolen identity where they don't have to rob anybody or stick a gun in anybody's face or run through the streets from police," Catlin said.
Although tax refund fraud has been around for decades, North Miami's interim police Chief Larry Gomer said the speedy returns and the option of having your refund issued on a debit card are making it easier for criminals to pull off the fraud.
"I think (the IRS's) intentions might have been good in trying to speed returns to members of the community, but I think the problem is, they have set up a system that is too easy to abuse," Gomer said.
He suggested that the IRS slow its processing of tax returns.
"Right now, when someone becomes a victim of income tax fraud and they catch it, it could take up to a year for them to get their return," Gomer said. "But the way that the IRS is running the system right now, somebody can make a fraudulent return, (and) they are mailing out a check to them in two weeks without checking the information on the return."
Thieves steal identities, file returns using real taxpayer's name
In Florida, where identity theft is rampant, the cities of North Miami Beach and Tampa have been particularly hard hit by the fraud. Police estimate that in the past two years, criminals in Tampa have cashed in on $450 million in fraudulent tax return money.
Even police who are fully aware of the scam have become targets themselves, including four North Miami Beach Police Department detectives who specialize in combating tax refund fraud and officers in other South Florida police departments.
Police in Tampa discovered "a written tutorial that tells you step by step how to commit this type of crime," according to the city's police chief, Jane Castor.
Criminals may be pocketing your tax refund | News - Home
NORTH MIAMI BEACH, Florida (CNN) - Criminals across the country are raking in billions of dollars in tax refunds through a new and brazen form of fraud that takes advantage of the IRS's fast online returns, law enforcement officials say.
Quick Clicks
Tax Tips for Procrastinators
Using laptops and free Wi-Fi connections, criminals are stealing identities and using the names of legitimate taxpayers to file fraudulent online tax returns. They've raked in billions, buying luxury cars, expensive jewelry and plastic surgery, police said.
"It's like the federal government is putting crack cocaine in candy machines," said Detective Craig Catlin of the North Miami Beach, Fla., Police Department. "It's that easy."
First, thieves obtain Social Security numbers and other personal information from insiders at hospitals, doctor's offices, car dealerships or anywhere the information is stored. Then, they file an online tax return using the real taxpayer's name and a fictitious income. In most cases, the criminals buy a debit card so the IRS can issue the refund on that card, although some thieves have also gotten their returns on actual Treasury checks.
The thieves know that the IRS does not verify the employer W-2s sent with the return until after the refund is issued.
It is a particular problem in the state of Florida, according to law enforcement officials.
"We can't go ... two days in a row without making a traffic stop, and there's going to be tax return fraud in the car," Catlin said. "We could stop an 18-year-old kid who's got five (debit) cards. The average is $5,000 per card. So they'll have $25,000, which is really cash, even though it's on debit cards."
And it's not just small-time criminals, he said.
"We have other cases that range up to $100 million where subjects have opened up corporations and bank accounts and business accounts," Catlin said. "And they're receiving millions of dollars from the IRS that are all fraudulent."
Last year, North Miami Beach police arrested the leader of the "Money Avenue" gang that they say specializes in tax return fraud. When police searched his home, they found about $250,000 in debit cards "just sitting on the dining room table for that week's worth of work," Catlin said.
"And inside his closet, there were nine to 10 spiral notebooks, ledgers of names, Social Security numbers, and dates of birth and the dollar amounts of returns that they've done on 3,000 victims," he added.
It's a crime that has replaced drug dealing in many neighborhoods.
"They're sitting on a computer or iPad; they're doing a return with a stolen identity where they don't have to rob anybody or stick a gun in anybody's face or run through the streets from police," Catlin said.
Although tax refund fraud has been around for decades, North Miami's interim police Chief Larry Gomer said the speedy returns and the option of having your refund issued on a debit card are making it easier for criminals to pull off the fraud.
"I think (the IRS's) intentions might have been good in trying to speed returns to members of the community, but I think the problem is, they have set up a system that is too easy to abuse," Gomer said.
He suggested that the IRS slow its processing of tax returns.
"Right now, when someone becomes a victim of income tax fraud and they catch it, it could take up to a year for them to get their return," Gomer said. "But the way that the IRS is running the system right now, somebody can make a fraudulent return, (and) they are mailing out a check to them in two weeks without checking the information on the return."
Thieves steal identities, file returns using real taxpayer's name
In Florida, where identity theft is rampant, the cities of North Miami Beach and Tampa have been particularly hard hit by the fraud. Police estimate that in the past two years, criminals in Tampa have cashed in on $450 million in fraudulent tax return money.
Even police who are fully aware of the scam have become targets themselves, including four North Miami Beach Police Department detectives who specialize in combating tax refund fraud and officers in other South Florida police departments.
Police in Tampa discovered "a written tutorial that tells you step by step how to commit this type of crime," according to the city's police chief, Jane Castor.
Criminals may be pocketing your tax refund | News - Home
