TAX FRAUD SCHEMES. - 60 Minutes

[TAXNJ]

Interesting segment covering ID Theft today reported on the tv show 60 Minutes 6-28-15.

[ATSMAN]

Interesting segment covering ID Theft today reported on the tv show 60 Minutes 6-28-15.

It did not surprise me at all!

[TAXNJ]

Amazing

It did not surprise me at all!

Amazing how it is increasing from a couple 100k to billions being stolen in just a few years from the taxpayers. Also, the segment shows how easy and methods used to create false returns by criminals.

[kathyc2]

For those like me that didn't see it, here's the transcript:

http://www.cbsnews.com/news/tax-refund-scam-60-minutes-steve-kroft/

Jail time should me significantly more than 40 months IMO.

[taxea]

saw it. this is one of the reasons why they are 1. tracing computers and 2. limiting refunds to 5 per address.

I think they should stop free and other on-line DIY filings.. Or require all returns to be efiled by PTIN holders. Wonder how much further they will get in their efforts by 2016.

[David1980]

saw it. this is one of the reasons why they are 1. tracing computers and 2. limiting refunds to 5 per address.

I think they should stop free and other on-line DIY filings.. Or require all returns to be efiled by PTIN holders. Wonder how much further they will get in their efforts by 2016.

I'm not sure how much requiring a PTIN (or an EFIN) for that matter would slow things down. It would be very easy for me to find someone willing to sign up for a PTIN or EFIN if I compensated them for it. Say, for example I directly deposit $8,000 to their account. Tons of people willing to go through background checks and so forth for an $8,000 payday. The best part is I don't even have to pay it, I can just file a tax return for them with an inflated refund...

[taxea]

I'm not sure how much requiring a PTIN (or an EFIN) for that matter would slow things down. It would be very easy for me to find someone willing to sign up for a PTIN or EFIN if I compensated them for it. Say, for example I directly deposit $8,000 to their account. Tons of people willing to go through background checks and so forth for an $8,000 payday. The best part is I don't even have to pay it, I can just file a tax return for them with an inflated refund...

wouldn't that be committing tax fraud now that the IRS regulates PTIN holders?

[David1980]

wouldn't that be committing tax fraud now that the IRS regulates PTIN holders?

PTIN holders aren't all under circ 230 if that's what you're thinking, but yes I'm talking about committing tax fraud. It's still tax fraud even if the perpetrator is not regulated by the IRS. This thread is "tax fraud schemes - 60 minutes" after all. The question is, so what? If I pay some homeless guy to get a PTIN so that I can file fraudulent returns with it what is my real risk and what is the potential punishment? Is it enough to stop an identity thief from doing it?

I think if someone was already committing identity theft without using a PTIN, they'll be willing to steal/pay for a PTIN to continue filing should a PTIN be required. This already happens with EFINs (no rejects for DOB mismatch make it easier for someone to commit identity theft with an EFIN. Probably has better payout rates vs. DIY as well.)

[TAXNJ]

Well said

PTIN holders aren't all under circ 230 if that's what you're thinking, but yes I'm talking about committing tax fraud. It's still tax fraud even if the perpetrator is not regulated by the IRS. This thread is "tax fraud schemes - 60 minutes" after all. The question is, so what? If I pay some homeless guy to get a PTIN so that I can file fraudulent returns with it what is my real risk and what is the potential punishment? Is it enough to stop an identity thief from doing it?

I think if someone was already committing identity theft without using a PTIN, they'll be willing to steal/pay for a PTIN to continue filing should a PTIN be required. This already happens with EFINs (no rejects for DOB mismatch make it easier for someone to commit identity theft with an EFIN. Probably has better payout rates vs. DIY as well.)

As you state "what is the potential punishment?". Fraud is going to happen and is increasing as proved by facts in this report. Is three to fours year in prison a deterrent?

One report said a sentence of 27 years was given. Could that be the possible solution vs. three to fours year in prison?

[taxmom34]

I saw the 60 minute piece and was amazed at how many fraudulent returns these guys were submitting every day . the guy averaged 40% of refunds he submitted. I think that the best way to at least stop some of this is to get rid of the EIC credits, send these monies back to the welfare department of each state and let local government figure out who gets how much. they are more likely to be able to see the fraud. the EIC credit is so large that crooks are not worried about getting caught.
another area is for IRS to not allow monies to be deposited to someone else's bank account. if your name is not on the account you get a check in the mail.
just my two cents, thank you.

[taxea]

The majority of these ID theft returns were done through free DIY online or other DIY tax software,,,they don't require a ptin for filing....my post suggested this type of filing should be eliminated.

[TAXNJ]

Great

The majority of these ID theft returns were done through free DIY online or other DIY tax software,,,they don't require a ptin for filing....my post suggested this type of filing should be eliminated.

Great suggestion. How did you verify the stats?

Hope and wonder if the IRS is aware of this and if so, why not implement what you suggest?

[David1980]

I saw the 60 minute piece and was amazed at how many fraudulent returns these guys were submitting every day . the guy averaged 40% of refunds he submitted. I think that the best way to at least stop some of this is to get rid of the EIC credits, send these monies back to the welfare department of each state and let local government figure out who gets how much. they are more likely to be able to see the fraud. the EIC credit is so large that crooks are not worried about getting caught.
another area is for IRS to not allow monies to be deposited to someone else's bank account. if your name is not on the account you get a check in the mail.
just my two cents, thank you.

Yes, I agree. Eliminate refundable tax credits (administer welfare differently) would be great for reducing identity theft fraud. That would of course require an act of congress which is not likely, unfortunately. The only thing the politicians can agree on is the tax code should be updated/simplified. But try to actually do it and they cannot agree on which direction to go.

Matching up withholding before issuing a refund would help as well. There's complications there of course.

Improving the system to require the name on an account match would help. I think right now the IRS sends the name with the deposit but it's up to the bank to reject or not reject the deposit.

Taxpayer PIN is a good one too that was mentioned here. While a doctor or school might have my SSN they wouldn't have my tax filing PIN. So it would offer an additional level of protection and certainly the big insurance companies have been getting hacked left and right this year.

Strict penalties for sure. Would it require congress to act? I'm not sure where criminal penalties are determined.

Requiring PTIN? I just don't see that as really helping anything. Obviously if we forced every taxpayer to use a paid preparer it would be fantastic for us business wise - eliminate the DIY filers. But from a practical matter it's simple to get a PTIN. It would be like installing a lock on your home's front door that requires a key. Any key - not a specific key. All someone would have to do to open that lock is to get a key from anywhere and they'd be in. Same with requiring a PTIN. Use the PTIN off the return your preparer did for you last year for example.

[taxea]

Great suggestion. How did you verify the stats?

Hope and wonder if the IRS is aware of this and if so, why not implement what you suggest?

yes the IRS is aware and this is the reason why some states took a second look at returns filed though Turbo Tax.

[Uncle Sam]

"forced every taxpayer to use a paid preparer"

I believe you left out one MATERIAL difference -
How about a LICENSED paid preparer?