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FBI
Tax Return Fraud
Criminals are proficient in stealing the personally identifiable
information (PII) of individuals to facilitate various fraud
activities, including using stolen identity information to file
fraudulent tax returns. Once the fraudsters obtain victim PII, they
electronically file tax returns and set up pre-paid debit cards or bank
accounts to route fraudulent returns. The balances on the pre-paid
cards and bank accounts are depleted shortly after the tax refund is
issued.
The fraudsters utilize multiple methods to obtain the information
needed to file a tax return. The most popular methods include: computer
intrusion, the online purchase of stolen PII, the recruitment of
insiders who have legitimate access to sensitive information, the
physical theft of computers that contain PII, the impersonation of
Internal Revenue Service personnel, and the aggregation of information
that is obtained through multiple publicly available Web sites.
Recent open source reporting indicates that cyber criminals also target
and compromise legitimate online tax software accounts of individuals.
Cyber criminals conducting this scheme modify victims’ bank accounts to
divert transfers to bank accounts or pre-paid cards under their
control.
Victims who filed complaints with the Internet Crime Complaint Center
(IC3) reported they discovered they were victims of tax refund fraud
when they tried to file a return and were notified by the Internal
Revenue Service that their Social Security Numbers had already been
used to file a tax return. One individual reported that due to an error
in direct deposit account information submitted on his return, he was
issued a check. However, the victim had not yet filed a return. Others
reported before they filed their return, they received notification
that their returns were being audited or were under review.
A recent investigation identified a tax refund fraud ring responsible
for filing approximately 644 fraudulent tax returns totaling over $1.9
million in attempted fraud. Using fraudulently obtained PII, the
fraudsters submitted tax returns and requested the funds be deposited
into bank accounts under their control. The group recruited college
students to open accounts to collect the tax refund monies. The
students withdrew funds via ATMs and counter withdrawals. The students
then passed the majority of the funds to another group member and kept
a portion of the refund as payment for the use of their bank accounts
to conduct the scheme.
This type of fraud is a growing concern as the number of complaints
filed with the IC3 has doubled from 2013 to 2014.
If you believe you have been a victim of this scam, you should reach
out to your local IRS or FBI field office, and you may file a complaint
with the IC3 at www.IC3.gov. Please provide any relevant information in
your complaint.
Tips to protect yourself:
Monitor your credit statements for any fraudulent activity.
Report unauthorized transactions to your bank or credit card company as
soon as possible.
Review a copy of your credit report at least once a year.
Be cautious of scams requiring you to provide your personal information.
Do not open email or attachments from unknown individuals.
Never provide credentials of any sort via email. This includes clicking
on links sent via email. Always go to an official website.
If you use online tax services, double check to ensure your bank
account is accurately listed before and after you file your tax return.
Ensure accounts that are no longer being utilized are properly deleted
or scrubbed of sensitive information. Allowing online accounts to
become dormant can be risky and make you more susceptible to tax fraud
schemes.
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