U.S. Losing Billions Each Year In Stolen Identity Tax-Refund Frauds


The fraudsters include barbers, postal workers, check cashers and even police, all tempted by a criminal enterprise some consider more lucrative than selling drugs, reports the Washington Post. Their sophisticated networks swipe billions of dollars from the U.S. government each year even as authorities increase their efforts to stop them. Their scheme, known as stolen identity refund fraud, is simple: steal unsuspecting victims' personal information, then use it to direct tax refunds to themselves.

In the past three years, their misdeeds have increased exponentially, prompting the Internal Revenue Service to launch nearly 1,500 investigations in the past fiscal year, up from just 276 in fiscal 2011. “This is something that is becoming absolutely rampant throughout the country,” said IRS agent Joy Cuffee. A recent report from the office of the Treasury inspector general for tax administration said $3.6 billion in potentially fraudulent tax refunds was issued in tax year 2011. The IRS says a typical case for a taxpayer whose identity is stolen takes about 180 days to resolve.

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