$4 billion: Bogus tax refunds a growing problem

By Eric Tucker

Associated Press

Published: Thursday, April 10 2014 10:25 p.m. MDT

In Washington, a barber shop owner pleaded guilty last year to running a $20 million fraud scheme that sought tax returns on behalf of nursing home residents, prisoners and the dead. Some people sold their own personal information, while others turned it over after being led to believe they were entitled to "Obama Stimulus Money" or an income tax refund. A Cincinnati woman pleaded guilty in January to submitting false tax returns on behalf of legitimate, unwitting businesses, using her laptop computer in a public library.

A November Treasury Department inspector general report said fraudulent payouts over the previous year also went to addresses in Bulgaria, Lithuania and Ireland. In the U.S., more fraudulent refunds went to Miami than any other city.

Assistant Attorney General Kathyrn Keneally, who heads the Justice Department's Tax Division, said refund fraud remains a serious concern but that authorities are "turning a corner" in their understanding of the crime and their ability to track down and prosecute fraudsters.

"We're getting more and more sophisticated about how to catch it, how to stop it and how to prosecute it as we go on," she said.

In Miami, law enforcement officials say they've been encouraging people and companies to better protect their information and have been targeting those who buy and sell personal data before any false return can even be filed.

"That's the only thing we can do on our side, is just tell them be more cautious with your information," said FBI Assistant Special Agent in Charge Bill Maddalena.

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