Identity thieves exploit tax law
Something was odd when the IRS letter arrived in the mail.
Addressed to Sherril and Jessica, it asked about the couple's 2013 joint tax return. Only problem: Sherril Cortez had already filed her 2013 income tax return — with her husband of 25 years, Manuel.
In the letter, Cortez, a graphic designer and mother of two, was asked to contact the IRS to verify her identity. When Cortez showed up at the local IRS office in Sacramento — with her tax records and two requested forms of ID — she was startled to discover that someone had filed a second, but bogus, 2013 tax return using her name, address and Social Security number.
“It was a little alarming to get a letter like that,” Cortez said. She didn't know “Jessica,” the woman whose name was linked to hers, and has “no idea” how they wound up together on a same-sex tax return.
According to what Cortez was told at the IRS office, she and “Jessica” reported an almost-identical income to that of Cortez and her husband. But, because the phony tax return claimed much higher deductions, it was entitled to a much bigger tax refund.
“It sounds like another example of a tax refund scam,” said Arlette Lee, special agent with the IRS criminal investigation division office in Oakland, Calif.
“We do see scams emerging from changes in federal law,” Lee said. “Somebody will figure out a way to take advantage and try to get money from the federal government.”
She was referring to a significant change in federal tax law in 2013, enacted to accommodate same-sex taxpayers. Last August, the IRS and U.S. Treasury announced that legally married same-sex couples could now file their federal income taxes as married couples. The change was because of the U.S. Supreme Court ruling in the Defense of Marriage Act.
Until then, married same-sex couples often had to file two types of income tax returns — one as married filing jointly in their home state — and a separate one filing individually for the IRS.
Starting with the 2013 tax year, that federal separate-tax-return requirement was eliminated. And apparently, it opened the door for a new form of tax return fraud.
According to Cortez, she was told that the fake tax return was red-flagged for several reasons: her name had always appeared on a joint return with a male spouse, not female. And on the bogus return, her Social Security number was listed first, as the primary taxpayer, which was never the case on her old returns.
Regardless of how it's executed, fraud has been a persistent problem for the IRS.
To combat ID theft, the IRS initiated a nationwide investigative effort in 2012, assigning 3,000 tax agents to investigative units. That year, the IRS said it thwarted $20 billion in fraudulent tax returns, compared with $14 billion in 2011. In January 2013, the IRS conducted a coast-to-coast sweep of identity theft suspects that led to more than 700 enforcement actions, including 298 indictments, complaints and arrests.
But tax-related ID fraud never gets stamped out entirely. Another form of ID theft “popping up quite a bit,” Lee said, is that of phony telephone calls, trying to scare or trick people into handing over money. Some callers claim to be IRS agents, using fake names and badge numbers. They might say you owe taxes, are under investigation, or are entitled to a large refund. Sometimes they threaten to arrest you or revoke your driver's license if you don't comply by sending funds or personal information. In most cases, they offer bogus phone numbers or emails to contact them.
“We're warning the public: Don't fall for this. The IRS is not going to call you and threaten arrest,” said Lee.
Instead, hang up and contact the IRS directly, using the 800-829-1040 consumer line. Do not call using the number that appears on your caller ID. It may appear to be legitimate but could be a fake “spoof” of a real IRS number.
Attempts at tax return fraud are relentless and often require time-consuming, complex investigations that can hold up legitimate tax refunds going to honest taxpayers. “Cases of resolving identity can be complicated by the thieves themselves contacting the IRS,” said the IRS on its website. “Due to the complexity of the situation, this is a time-consuming process,” with the average case taking 180 days to resolve, it said.
In general, if you get an IRS letter indicating there may be fraud related to your account, respond immediately, using the phone number or email in the letter. Lee also urges anyone who's been affected by ID-theft related tax fraud to contact the IRS criminal investigations unit. “Please come to talk with us as well,” said Lee. “We want to see patterns or other cases that fit in this category. Sometimes it's random or sometimes it's part of a scheme that the IRS is already investigating. But we won't know unless you come talk to us.”
Cortez, who found herself linked with another woman's name on a phony return, will probably never know how it happened. And like Cortez, the other woman might also be completely innocent. “They told me, ‘Don't assume she's the guilty party. She might be a victim just like you.'”
To protect her identity from further scams, Cortez was advised to obtain a free copy of her credit reports, to check for any fraudulent accounts opened in her name.
In May, two weeks after showing up at the IRS tax office, Cortez and her husband finally got their 2013 tax refund in the mail. As for the attempted fraud, “I have no idea how it happened,” said Cortez. Apparently, “I was just a random name and number that someone used.”
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Energy companies vie for experienced workers with skills in high demand
- Energy Spotlight: Adam Pope
- Energy-saving tactics pay off in Green Workplace Challenge
- Former athletes open businesses
- Chevron laying off 162 workers from Moon-based unit
- Energy industry says it’s on top of methane leaks, but environmentalists want oversight
- $300K in wine bottles stolen from Napa Valley restaurant found in North Carolina cellar
- Bank of New York Mellon 4Q earnings rise to $793 million, but revenue sluggish
- Typewriters back in style, keeping repair shops busy
- Mylan loses Supreme Court fight over multiple sclerosis drug
- Ad agency to close after losing Highmark business