Identity thieves steal money through tax returns

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SALT LAKE CITY — With tax season in full swing, experts are warning Utah residents to be careful in filing to avoid identity theft. While there are a million reasons to procrastinate filing your taxes, there is one very good reason you may want to hurry and get it done. It has become a race between you and identity thieves, and the winner gets the cash.

Loren Walters said she found out about identity theft during tax season the hard way.

"I got this email from Turbo Tax saying my taxes had been filed for 2013," Walters said. "And I thought, well that's kind of weird because I haven't done my taxes."

Walters didn't file her taxes, but someone else did. They stole her name and social security number and that's all it took for a criminal to file a bogus 1040 through Turbo Tax.

"Two weeks later, here we are, paying out our tax money to some criminal," Walters said.

Her $5,600 return went straight to an anonymous thief.

"Usually the first person who files a tax return gets, if you will, the most attention," said Special Agent Chad Cutting.

And by "attention," he means money. Cutting works the IRS Criminal Investigation Unit in Salt Lake City. He said that tax fraud, through identity theft, is one of the biggest challenges his team faces.

"They're not using guns, they're not using knives to steal from people, but they're taking advantage of the government system with taxes," Cutting said.

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A 2011 audit by the Treasury Inspector General for Tax Administration revealed 1.1 million tax returns were filed using false social security numbers. Those returns went undetected by the IRS, costing taxpayers $3.6 billion.

In Florida, gang members were arrested after police uncovered an operation involving hundreds of false tax refunds, raking in nearly $2 million. A flash drive belonging to one of the gang members revealed the names, birth dates and social security numbers of more than 2,000 people.

All of them are potential victims like Walters. Within hours of the fraudulent filing, she and her boyfriend said they called Turbo Tax, the IRS, the FTC, the Salt Lake Police Department, the Attorney General's Office and the Social Security Administration.

Walters said all they kept hearing was, "We can't prove that this isn't you and that this is fraud activity."

She said even a quick look at previous returns would have shown a bulk of the information on the 1040 was not accurate.

"There's a bunch of information that doesn't quite make sense," said Walters.

The fake Loren Walters is a former construction worker, taking teacher deductions, making the wrong amount of money, married to a woman and lists her current occupation as a bus driver. Every bit of it is false.

Walters believes a simple verification by the IRS, before accepting a return and sending out the money, would save taxpayers billions of dollars. Unfortunately that simple verification would take time, which is something the IRS doesn't have as long as the general public wants their taxes done in turbo.

"It's a tough balance and the IRS is still working on it," Cutting said.

Until that happens, Cutting said the best thing you can do to make sure you don't become a victim, is file your taxes quickly before someone else tries to file under your name.


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Mike Headrick


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