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Weariness of Refund Fraud Heightens as Tax Season Returns

Contributed by Digital Media Circle
21 February, 2014

In the first six months of 2013, it is believed that 1.6 million Americans were victims of tax refund crimes. Such a figure is an increase of 400,000 from 2012. A November report released by the Treasury Inspector General for Tax Admission confirmed the figures, proving that tax fraud is on the rise, creating problems for millions of hard working American citizens.

Tax Fraud: How Is It Done?

Although committing tax fraud is incredibly hard to do, technological advancements have made the process far simpler, and even lengthy, secured passwords allied with email encryption services may not make you completely safe, with hackers and scammers using state of the art technology to access accounts through unsecure businesses.

In order to commit the crime, scammers will file a phony electronic tax form for an IRS refund by using both a stolen name and a U.S. security number. Committing such a crime has now become big business and has been described by the Treasury Inspector General for Tax Admission as a “growing epidemic”.

Over the course of the last fiscal year, figures show that 438 people were convicted of identity theft tax refund fraud and were, on average, sentenced to 38 months in prison. Overall, it is still felt that the punishments for such a crime are nowhere near as severe as they should be considering the potential gains for the criminals themselves.

However, despite this hardening of a stance by many, although more individuals were caught during 2013, they actually received a slightly more lenient sentence than those punished in 2012 who received an average sentence length of 48 months. In reality, the criminals largely remain one step ahead of their federal counterparts. With the potential rewards so great, the level of punishment so lenient and the chances of being caught relatively small, it looks as though 2014 will be another bad year for identity theft tax refund fraud. At best they may stabilise, but many expect them to rise once more.

Tax Season Underway

We are now three weeks into the tax season, with tax returns due by April 15. In the first week of the season alone, the IRS issued 19.5 million refunds; a figure that is up by a staggering 18.5 percent from the same period last year. The average refund is also up by just over $40 to $3,317.

Traditionally speaking, this is the time where many scammers will file for their bogus returns and then, as the April close date approaches, they will turn their attentions to targeting taxpayers who are filing their own returns.

This year in particular, the IRS has implemented additional filters to try and protect themselves and citizens from bogus filings. However, although they’ve stepped up their systems, so have the criminals and so the game of cat and mouse continues.

With the American economy currently in a state of flux with U.S. futures lying flat, federal ability to avert identity theft tax refund fraud could be essential in order to restore confidence in the political and financial institutions that let them down badly in 2013. 


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