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  (Source: accountingweb.com)
The IRS receives 100 million tax returns per year, and so far this year, 2.6 million cases of fraudulent returns have occurred

Tax fraud is on the rise, especially in the state of Florida where cyber criminals are posing as other people and taking advantage of their tax refunds.

According to a new report by The New York Times, cyber criminals are costing the U.S. Internal Revenue Service (IRS) hundreds of millions to billions of dollars in fraudulent refunds. Hackers simply get their hands on private information like names, birth dates and social security numbers to do so.

With this kind of information, cyber criminals are filing electronic tax returns. They pose as a legitimate person who hasn't filed their taxes yet, and receive refunds in the way of government-approved debit cards or checks. These cards or checks are often mailed to abandoned homes, which the criminals list as their addresses, and money is wrongfully collected from the IRS.

By the time the legitimate person goes to file their tax returns, the IRS must launch an investigation into the second claim, which can take as long as a year. Most times, the IRS ends up having to pay both claims, since the first fraudulent filing is hard to trace.

Tax fraud cases are becoming more and more frequent. The IRS receives 100 million tax returns per year, and so far this year, 2.6 million cases of fraudulent returns have occurred. Most of them are identity theft-related, and only 30 percent of the filings have been reviewed for this year, meaning this 2.6 million could dramatically increase by the time all tax filings are reviewed.

Earlier this month, J. Russell George, U.S. Treasury inspector general for tax administration, told Congress that there were 940,000 known fraudulent returns in 2010, which amounted to $6.5 billion. He also noted that there were an additional 1.5 million returns that could have possibly been fraudulent that same year, which amounts to about $5.2 billion.

So far, the IRS has deployed improved technology for detecting fraudulent claims, distributed personal identification numbers for victims, and hired more investigators and employees to look into claims.

These efforts appear to be making some sort of difference, considering the fact that the number of fraudulent claims that were stopped from 2008 to 2011 increased dramatically. In 2011, the IRS stopped 1.3 million fake claims.

While this happens all over the U.S., the problem is particularly apparent in the state of Florida. According to NYT, this is because Florida's population consists mainly of senior citizens, and the state has many health care facilities that criminals easily steal information from.

"The IRS is doing what they can to prevent this, but this is like a tsunami of fraud," said Wifredo A. Ferrer, the United States attorney for the Southern District of Florida. "Everywhere I go, every dinner, every function I attend, someone will come up to me and tell me they are a victim -- people in this office, police officers, firefighters."

Source: The New York Times



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Lack of common PC sense
By 1ceTr0n on 5/29/2012 5:02:53 PM , Rating: 2
Would equate to the main reason so many people get screwed over by identify theft.

But then again, I had identify theft incident several years ago after my bank CC being charged across the other side of the country by a guy who had no idea it was my information in the first place for two packages of some kinda software for almost a grand.

After talking immeditetely with my bank and actually managing to get a hold of the guy in the keys off of Florida, it got sorted out, but what a farking pain it was....




RE: Lack of common PC sense
By TSS on 5/29/2012 6:34:41 PM , Rating: 1
No it would most certainly not. It may be the reason how stuff gets stolen (through a tech unsavvy nurse on a less then ideally secured hospital network for example), but not the reason why.

The reason why is brainwashing. We're all brainwashed. Let me explain.

This is the 2nd time i type this post. During the first time, i wanted to argue it's how we deal with an increased population. We can't know everybody since there are too many people, so we resort to identification through documentation, rather then taking people at face value.

But i asked myself a question. "How do you identify a person without documentation?". And my brain awnsers, "By his identification papers". Strange, no?

Well, then i asked myself how that is possible. And i know how. Because there are only 2 ways to identify a person without papers. You either trust their word for it, or you trust yourself to know wether or not the other person is lieing. I don't consider either of those to be adequate enough to deal with the situation, so my brain automatically reverts to "no papers, no identity".

I think that's the cause of these problems, and others like proving that you're still alive when you're administratively dead (one of the biggest hassles in todays world). But why is it happening? I doubt a larger population is the sole cause for it, as population count has no effect on wether or not i trust peoples words or trust my own judgement.

Now i'm a special case. I've always been an outsider, bullied all my life, so that i'm paranoid is no wonder. But i imagine a lighter version of this is what regular people feel when they ask themselves the question "do i belive what this person says or what this document says?".

We're brainwashed in choosing the document over the person. Even though it's much easyer to tell wether or not a person is lieing then wether a document is forged.


RE: Lack of common PC sense
By 1ceTr0n on 5/29/2012 9:40:33 PM , Rating: 2
What the fuck was that?


RE: Lack of common PC sense
By mindless1 on 5/30/2012 4:39:36 PM , Rating: 2
My parents recently went through this situation with tax fraud. Their info was in a corporate database somewhere and that was hacked.

Fortunately the IRS detected the fake first filing and stopped it, but it also rejected their legit filing until they sorted it all out with an agent.


simple solution
By AntiM on 5/29/12, Rating: -1
RE: simple solution
By tayb on 5/29/2012 8:26:12 PM , Rating: 1
You and Herman Cain should get together to talk about "fixing" the tax code.


RE: simple solution
By Galcobar on 5/29/2012 10:05:58 PM , Rating: 2
Erm, without a tax return and ID, how would you a) go about paying that $500 in tax or b) prove you paid it?

Beyond which, Americans actually pay some of the lowest tax rates in the developed world. It's part of why you're the biggest debtors too.


RE: simple solution
By Kurz on 5/30/2012 10:06:05 AM , Rating: 4
Its a spending problem... Not a tax problem.
If you give a man the ability to create wealth from nothing he'll exploit it any way he can.


RE: simple solution
By johnsmith9875 on 5/31/2012 10:04:29 AM , Rating: 2
Its a rich people problem. Rich people control congress, rich people control spending policy.

Ask a poor person if we should deficit spend, they will say no. But poor people don't run this country, rich people do.

Ever wonder why we blow 1 trillion dollars a year on national defense, because rich people are profiting from it.

Its not about jealousy.


RE: simple solution
By seeker353 on 5/30/2012 8:14:08 AM , Rating: 2
That makes no sense. Your mistake is thinking of children as 'using more resources' instead of thinking of them as future tax payers who will, through their lifetime, produce more than they consume.

So a person with kids must pay more to raise their kids, and pay more taxes. Those kids then grow up to pay the taxes that will fund the social security and Medicare (both more or less pyramid schemes) benefits that you will (hopefully) enjoy when you're retired. Meanwhile, people without kids pay less tax because they're contributing nothing to the future economic growth and tax base for our country? That's sure fair. The whole reason that we're going bankrupt is because we're not producing enough kids to bankroll all the retirees that are drawing SS and Medicare.

Of course, this does not take into account people who have more kids than they can afford, or the fact that SS and Medicare are not, as they are currently implemented, sustainable. However, those are two additional problems with no good solutions.


RE: simple solution
By Dr of crap on 5/30/2012 8:26:57 AM , Rating: 2
So our saying we need ever more kids. So every two make 4 or more and then if you do the math our population explodes.

No that will not be good. We need to keep the people mass down. And not add any more stupid to the world at large. We have enough stupid to last many years already!

See China, kids.


RE: simple solution
By seeker353 on 5/30/2012 8:51:06 AM , Rating: 2
To sustain the current US system, yes. Once again, that's not to say that our system doesn't need serious fixing. However, based on reality, the system will likely never be fixed until after it’s too late.

Also, what is the alternative to having more kids? Having the government come in and dictate to us our reproductive rights like in China? Asking the responsible population to voluntarily stop having kids, so only the irresponsible people reproduce, creating the explosion of stupid you mention? Some sort of unconstitutional system of childbearing licenses, where only those deemed fit are allowed to have kids? Who will be the one to determine who’s fit and who’s not?


RE: simple solution
By Dr of crap on 5/30/2012 9:22:04 AM , Rating: 2
I was merely stating that the system you posted would ONLY work if everyone had kids and lots of them.
I believe we have enough population and do not NEED anymore to put more burden on our resources.

And yes I agree that the system won't be fixed until it's too late, just like we always do. Wouldn't want to plan for the future at all! Just keep electing fools that take money for votes!


RE: simple solution
By AntiM on 5/30/2012 11:52:14 AM , Rating: 2
I'm hoping that taxing people with children will actually decrease the population.
We can talk about taxes all day. I agree, it's more of a spending problem than a taxing problem. I just merely propose a simpler tax paying process. If someone can falsely file a return in my name and claim a refund, (quite easily) then the current system is horribly broken.
What is the purpose of having to file a return in the first place? We already have income withheld from our paycheck, having to file a return unnecessarily complicates matters.
Under my proposal, I don't think anyone is going to falsely pay my taxes for me.


RE: simple solution
By Taft12 on 5/30/2012 11:40:19 AM , Rating: 2
Most first world countries have declining population when immigration is excluded. Steeply declining in some like Russia and Italy. It's just barely in the positive for the U.S.

The worldwide rate of population increase is dropping steadily and the world's population is expected to be stable somewhere around 2050 IIRC.

Some good reading on the subject:

"World population is projected to grow from 6.1
billion in 2000 to 8.9 billion in 2050, increasing
therefore by 47 per cent. The average annual
population growth rate over this half-century will
be 0.77 per cent, substantially lower than the 1.76
per cent average growth rate from 1950 to 2000."

http://www.un.org/esa/population/publications/long...

We may be "kids", luckily many of us are more informed than you, adult.


RE: simple solution
By johnsmith9875 on 5/31/2012 10:06:07 AM , Rating: 2
Third world populations are exploding due to access to cheap food. I wonder what will happen though when we hit the critical limit of 10 billion humans and the food runs out.


"I'm an Internet expert too. It's all right to wire the industrial zone only, but there are many problems if other regions of the North are wired." -- North Korean Supreme Commander Kim Jong-il














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