Wednesday, April 1, 2015

Brian Krebs is doing marvelous work reporting on tax fraud

Brian Krebs has been publishing some amazing stories on his website recently about the sophistication of computer-assisted tax fraud cases.

To wit:

  • Sign Up at Before Crooks Do It For You
    Recently, KrebsOnSecurity heard from Michael Kasper, a 35-year-old reader who tried to obtain a copy of his most recent tax transcript with the Internal Revenue Service (IRS). Kasper said he sought the transcript after trying to file his taxes through the desktop version of TurboTax, and being informed by TurboTax that the IRS had rejected the request because his return had already been filed.
  • States: Spike in Tax Fraud Against Doctors
    In this increasingly common crime, thieves steal or purchase Social Security numbers and other data on consumers, and then electronically file fraudulent tax returns claiming a large refund. The thieves instruct the IRS to send the refund to a bank account that is tied to a prepaid debit card, which the fraudster can then use to withdraw cash at an ATM
  • Crimeware Helps File Fraudulent Tax Returns
    “We were later notified that the breach was much deeper than originally suspected, which included all of our beneficiaries, their personal information, my life insurance policy, 401-K stuff, and our taxes,” Doug said. “My sister-in-law is an accountant, so I raced to her and asked her to help us file our taxes immediately. She pushed them through quickly but the IRS came back and said someone had already filed our taxes a few days before us.”

    Doug has since spent many hours filling out countless forms with a variety of organizations, including the Federal Trade Commission, the FBI, the local police department, and of course the Internal Revenue Service.

  • Citing Tax Fraud Spike, TurboTax Suspends State E-Filings
    “During this tax season, Intuit and some states have seen an increase in suspicious filings and attempts by criminals to use stolen identity information to file fraudulent state tax returns and claim tax refunds,” the company said in a statement.
  • The Rise in State Tax Refund Fraud
    States allow unlinked returns because most taxpayers owe taxes at the federal level but are due refunds from their state. Thus, unlinked returns allow taxpayers who owe money to the IRS to pay some or all of that off with state refund money.

It's great of Krebs to keep a light on this subject, because it's complex and frustrating.

Happily, slow progress appears to be being made, as Krebs covers in his latest column:

  • Tax Fraud Advice, Straight from the Scammers
    those involved in tax refund fraud shifted more of their activities away from the Internal Revenue Service and toward state tax filings. This shift is broadly reflected in discussions on several fraud forums from 2014, in which members lament the apparent introduction of new fraud “filters” by the IRS that reportedly made perpetrating this crime at the federal level more challenging for some scammers.


    According to a January 2015 GAO report (PDF), the IRS estimated it prevented $24.2 billion in fraudulent identity theft refunds in 2013. Unfortunately, the IRS also paid $5.8 billion that year for refund requests later determined to be fraud. The GAO noted that because of the difficulties in knowing the amount of undetected fraud, the actual amount could far exceed those estimates.

Lastly, and again kudos to Krebs, he's collected and summarized his advice for protecting yourself here: What Tax Fraud Victims Can Do.


Thank you, Brian Krebs, for all your hard work.

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