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Voice of the Consumer: Beat the false 1040 to the punch

By: betty sexton KKTV 11 News
February 7, 2016 Updated: February 7, 2016 at 3:36 pm
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The sooner you file your federal and state tax returns, the better. It's because you want to beat the crooks to the punch. You want to file your returns before they try to file phony ones in your name, stealing a lot of money from Uncle Sam.

Last year the Internal Revenue Service had a huge problem. Hackers attacked the agency's website and were able to get their hands on old tax records for more than 100,000 taxpayers. Some states and federal authorities noticed a lot of suspicious returns and figured out that the system had been hacked. That system was shut down, but not before damage was done.

The crooks, who also had personal information about their targets, got away with about $50 million. Taxpayers who were singled out were also victimized, forced to wait from three to 10 months before the matter was cleared up. Those who were expecting refunds just had to be patient.

Besides last year's hack, crooks have been filing fake returns in other people's names for eight years Reporter Steve Kroft with CBS' "60 Minutes" investigated how they're doing it. He found that con artists were using laptops and cell phones to commit fraud. They used an app and plugged in someone's Social Security number and date of birth to file a phony return. They also followed a few other steps we won't mention and re-routed the refund to another address. Seven days later they'd get a check in the mail.

Kroft interviewed a fraudster named Corey Williams who was sentenced to 40 months in prison after stealing millions from the IRS. Williams said, "Anybody who knew about it, you'd be a fool to not try to get involved with making some money. I could wake up in the comfort of my home, and just get on a laptop, do about 15 returns a day. Fifteen times $3,000 a return, that's $45,000 a day."

Williams said getting stolen identities was easy if you knew the right people who worked in hospitals, clinics, banks, and schools. It seems workers would steal the information on about 100 names for $1,000. Williams says no one turned him in to police because they were more interested in the cash than calling the cops.

The situation has gotten so bad filing parties are now held in apartments and hotel rooms where masterminds bring in others and show them how to commit fraud. They just require a cut of the money.

So how can the IRS stop these crimes? They might start delaying refund payments until they can be matched up with W-2 forms that are filed by employers. Or lawmakers could raise the penalties for those convicted of tax refund fraud. The best advice is file your tax returns early and beat the crooks to the table.

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Contact Betty Sexton at bsexton@kktv.com or 578-0000.

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