Tax Fraud Protection

As the number of criminal tax fraud cases continues to mount across the region and the nation, the Consumer Fraud Task Force is advising taxpayers to take precautions against becoming victims of identity theft.

One of the best ways to protect your identity and your money is to file early in the tax season to reduce the risk of thieves stealing your refund, the Task Force said.

Records show that identity thieves claimed $23 billion in fraudulent tax refunds between 2011 and 2014, according to fraud.org, a project of the Washington, D.C.-based National Consumer League. Tax ID fraud occurs when a thief files a tax return using a taxpayer’s personal information and bogus documents (usually a Social Security number, date of birth and falsified W-2 form), in order to illegally collect a tax refund.

FTC reported last year that the St. Louis metropolitan area has the highest rate of identity theft in the nation.

U.S. attorneys’ offices announced dozens of tax-related prosecutions in 2016, many involving identity theft or illegal collaborations between taxpayers and thieves. Among those targeted in Missouri and Illinois tax fraud cases were:

• A 30-year-old East St. Louis man who was convicted and sentenced to 38 months in prison for his role in operating a fraudulent tax return preparation business in the St. Louis area. The owner admitted that his firm’s tax preparers had been trained and instructed to increase clients’ refunds by falsifying their returns.
• A native of Nigeria living in St. Louis who was sentenced to 40 months in prison and ordered to pay restitution for his role in receiving more than $750,000 in a stolen identity tax fraud scheme. The man admitted to seeking more than $3.5 million in refunds, but most of the faked returns were caught by the IRS before any refund was made.
• A former Fairview Heights, Ill., woman who was sentenced to two and a half years in prison and ordered to pay restitution for using stolen identities in a scheme to receive more than $320,000 in fraudulent refunds. The woman was working at an IRS office in St. Louis between 2008 and 2011 when she stole the personally identifiable information of at least 120 people.

The IRS has issued two recent news alerts on identity theft schemes targeting tax professionals and human resource departments.

The Task Force offers these tips for safeguarding your identity and protecting yourself and others from fraud:

• Keep your Social Security information out of the hands of thieves by securing your card in a safe place and refusing to give the number to strangers.
• If you believe your personal information is compromised, report it to law enforcement and complete an Internal Revenue Service Form 14039 Identity Theft Affidavit, available online or by contacting the IRS. Follow IRS instructions.
• If you are a victim of identity theft, you may go to identitytheft.gov, a one-stop FTC site to report the fraud and get a personalized recovery plan.
• If you are notified of a data breach, determine what kind of information has been stolen so you can take appropriate steps.
• Report any suspicious activity regarding possible tax fraud by going to irs.gov and following instructions on reporting suspected fraud.
• Go to BBB’s Scam Tracker to learn more about tax fraud cases reported in your area and to report if you were a target (bbb.org/scamtracker).

The Task Force is a coalition of local, state and federal government agencies and nonprofit business and consumer groups in Missouri and Illinois that work together to protect consumer and donor rights and guard against fraud.

The group has tackled predatory payday loan offers, tax scams, timeshare reselling fraud, credit repair and foreclosure scams, bogus sweepstakes, Internet sweetheart scams, phony grant scams, home remodeling, air duct cleaning schemes and a variety of other issues.