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7 recent tax fraud schemes used by identity thieves

7 recent tax fraud schemes used by identity thieves

As we increasingly rely on E-filing tax returns, we increase the efficiency of IRS operations and our convenience. We also strip away some crucial layers of protection between identity thieves and unwarranted tax refund.

Reducing the human factor has led to a Renaissance in tax fraud. Last year saw 154,800 reported cases of tax-related identity theft, which the Federal Trade Commission reports is a 27% increase over 2010 (Consumer Sentinel Network Data Book, 2012).

Identity thieves now have two primary concerns when they are concocting a heist. They need to devise a clever system for moving and using their loot, and they need to figure out how to obtain your social security number and other identifying information, which they will use to fool the tax computer.

Instead of giving you run-of-the-mill anti-fraud tax advice, I thought it would be better to provide a few examples of the real and recent schemes used to steal your information.

  1. Jobson Cenor stole over a hundred names, dates of birth and social security numbers from fellow U.S. marines from other members of his unit while deployed in Afghanistan. Then he found a co-conspirator in the United States who helped him capitalize on the sensitive information.
  2. Aundria Bryant-Branch stole a “Warrant Book” from the Memphis Police Department and relayed the information to others who filed fraudulent tax returns.
  3. Natacia Webster used her security clearance as an employee in the central records office of an Alabama state agency to gain access to identifying information, which she then provided to Melinda Clayton for fraudulent filing.
  4. Marvince Milfort used stolen Social Security Administration (SSA) documents to fraudulently claim tax refunds that were not his own.
  5. Nelida Velasco stole personal identifiers from her employer – a medical billing agency.
  6. Jeffrey Toohey and Christopher Fleming robbed a tax preparation office of over 300 files and redirected the tax refunds to debit cards and accounts they controlled.
  7. William Joseph fraudulently obtained 13 tax refund checks representing roughly $70,000 in value. He was caught when he tried to cash the checks and fell victim to an FBI sting operation.

You can take every precaution with your sensitive information. You can use e-mail encryption. You can create inordinately complicated passwords on all your accounts, but a security breech can always occur behind the scenes and outside your control.

One of your greatest protections is to file your tax return as early as humanly possible. Once your filing lands in the IRS system, any fraudulent claims will automatically be revoked. Take the initiative, and file your taxes in January to win this race to the IRS.


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