TribLIVE

| Business

 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Identity thieves exploit tax law

Email Newsletters

Click here to sign up for one of our email newsletters.

On the Grid

From the shale fields to the cooling towers, Trib Total Media covers the energy industry in Western Pennsylvania and beyond. For the latest news and views on gas, coal, electricity and more, check out On the Grid today.

'American Coyotes' Series

Traveling by Jeep, boat and foot, Tribune-Review investigative reporter Carl Prine and photojournalist Justin Merriman covered nearly 2,000 miles over two months along the border with Mexico to report on coyotes — the human traffickers who bring illegal immigrants into the United States. Most are Americans working for money and/or drugs. This series reports how their operations have a major impact on life for residents and the environment along the border — and beyond.

By The Sacramento Bee
Saturday, Aug. 9, 2014, 9:00 p.m.
 

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.”

Subscribe today! Click here for our subscription offers.

 

 


Show commenting policy

Most-Read Business Headlines

  1. Consol takes $603 million loss in second quarter
  2. Leisure, hospitality lead Pittsburgh area job gains
  3. Ambridge’s PittMoss takes off with help from TV show, Mt. Lebanon native Cuban
  4. U.S. Steel to debut oil, gas pipeline connector
  5. Plummeting natural gas prices slash revenue of Marcellus shale producers
  6. Alcoa among 13 firms in $140B carbon-footprint pledge
  7. Israel’s Teva drops bid for Mylan, buys Allergan for $40.5B
  8. Invasive beetle costs Pittsburgh-area power companies plenty
  9. Muni bond funds stressed
  10. Bayer sets sights beyond aspirin
  11. Pitt to start Energy Law and Policy Institute