Archive | Fraud

Is that friendly tax pro really an undercover federal agent?

Today’s nominee for Stuff You Just Cannot Make Up: The New York Times reports that officers from more than three dozen agencies have posed as business people, welfare recipients, political protesters and–yes–even tax professionals, as part of undercover investigations.

“At the Internal Revenue Service, dozens of undercover agents chase suspected tax evaders worldwide, by posing as tax preparers or accountants or drug dealers or yacht buyers, court records show,” The Times reports.

I’d like to think that IRS officials are going undercover to help ferret out identity theft, which is becoming a huge issue for taxpayers who find out their Social Security Numbers have been stolen (usually when they try to file their returns), money laundering and other illegal operations. But as with all secret government programs, part of the problem here is that we don’t know what we don’t know.

“The Situation” is in a not-so-good tax situation

Did you know that “Jersey Shore” reality show personality Michael Sorrentino, aka “The Situation”, and his brother Marc, grossed almost $9 million in a variety of ventures over four years? Me neither, until I read the U.S. District Court indictment, reported inThe New York Times,charging the brothers with conspiracy and filing false tax returns. Michael was also charged with failing to file a tax return for 2011.

The full amount that the government might try to collect isn’t clear, because the indictment charges the brothers with failing to report all of their income and, as the press release from the US Attorney’s Office puts it , “fraudulently claim[ing] millions of dollars in personal expenses as business expenses, including payments for high-end vehicles and clothing, personal grooming expenses, and distributions – or direct payments – from the businesses to personal bank accounts.”

The brothers face potential penalties of up to five years in prison and a $250,000 fine on the conspiracy charge, and up to three years in prison and a $250,000 fine for each filing of a false tax return. Failing to file a tax return could cost Michael as much as a year in prison and a $100,000 fine.

These are, of course, merely accusations, and the brothers are considered innocent unless and until proven guilty. But this is surely not A Situation that The Situation planned on being featured in.

IRS getting scammed for $Billions by refund fraudsters

Stories of scammers claiming to be with the IRS and taking advantage of unsuspecting taxpayers appear regularly, including here.

Turns out that the IRS is getting scammed as well.

As this Associated Press story from The Boston Globe reports, the IRS issued $4 billion — yes, billion with a B — in fraudulent tax refunds over the course of a year to criminals who were using other people’s personal information.

In some cases, the IRS’s desire to issue quick refunds plays right into the bad guys’ hands: The AP reports that 655 refunds were sent to ONE address in Lithuania.(Wouldn’t you think somebody might notice that?)

So how do the scammers do this? It all starts with stealing your Social Security number, and then filing a fraudulent tax return that generates a refund — which goes into the thief’s bank account, not yours.

The taxpayer typically doesn’t find out there’s a problem until she tries to electronically file her own tax return and gets a message from the IRS that another tax return using the same Social Security number has already been filed.

In the Pacific Northwest, more than 1,000 employees and volunteers with the Catholic archdioceses of Portland and Seattle may have been victimized, as The Oregonian and the Seattle PI reported.

When someone else successfully files a fraudulent return using your Social Security number, your only recourse is to file your own return on paper and then fill out Form 14039, Identity Theft Affidavit. Then, hopefully, you’ll get your refund and be able to electronically file your return the following year.

Here’s a link to an IRS webpage on Identity Theft, which can also take you to that Theft Affidavit form.