Over the last few weeks, social security numbers, private income data, and other personal information has no doubt been flying through cyberspace at breakneck speeds as every law-abiding American citizen is scrambling to file their tax returns before the deadline.
To criminals who are digitally-inclined, tax time may seem like a goldmine for easy fraud – the countless data breaches going on all over the web, the growing landscape of unmanned filing processes, and an entire population of people who trust the system completely – nobody’s watching, right?
For five years running, identity theft has held the number one spot on the IRS’s annual release of The Dirty Dozen, a list of tax scams to look out for, and folks have definitely been taking their advice.
If you are charged for tax-related identity theft, you need to understand that the consequences are very serious, and require professional legal advice. Seek an experienced white collar crime lawyer sooner rather than later.
Just how seriously are these types of offenses being taken?
The Security Summit Initiative
2019 marks the fourth tax season since the IRS, state tax agencies, and the private-sector tax industry enacted their first Security Summit Initiative meetings, where partners shared indicators and techniques that have successfully expanded protections against fraud and helped recover fraudulent refunds more quickly than ever.
“Between 2015 and 2018, the IRS protected a combined $24 billion in fraudulent refunds by stopping the confirmed identity theft returns.”
This year, there are more than five dozen separate groups participating in this information sharing and analysis effort — all at the ready to react and respond to suspicious activity.
So, what exactly are tax-related identity theft and the suspicious activities for which you might be flagged?
Tax-related Identity Theft Legally Defined
Identity theft occurs when a person knowingly obtains, possesses, or uses the identifying information of another person living or dead with the intent of fraudulently representing that person for the purpose of financial or other gain.
Tax-related identity theft occurs when someone uses a stolen Social Security number to file a tax return claiming a fraudulent refund. People are often able to successfully file a fraudulent return because victims aren’t aware it’s happened until they attempt to e-file and discover a return has already been filed under their SSN. Sometimes they are tipped off when the IRS sends a follow-up notice regarding the suspicious return.
This activity is a form of income tax fraud, falling under the act of preparing and filing a false return.
What North Carolina Tax Payers Are Being Told to Look For
The public-facing component of fighting tax-related identity theft happens via the “Taxes. Security. Together.” campaign, raising awareness of suspicious activity and urging taxpayers to take a more active role in protecting their own information.
Some of the warning signs they are learning about include:
- More than one tax return filed under their name and/or Social
- Notification indicating additional tax owed
- IRS letters stating collections action is being taken before they’ve filed
- Official records reflect income from an unknown employer
Taxpayers that suspect they’ve fallen victim to identity theft are being asked to continue filing as normal so documentation reflects both filings. Afterward, they can file a complaint with the FTC, and place a “fraud alert” on their credit records through at least one of the three major credit bureaus.
From there, law enforcement recommends they contact banks and other financial institutions to close any accounts that appear to have been opened without permission or that appear tampered with.
Once all of the previous steps have been taken, the IRS will conduct an investigation through the law enforcement branch of the agency (the IRS CI). Its agents look into tax crimes through an all-hands-on-deck approach with the Security Summit Initiative, which employs its 65-member organization and every sophisticated method at their disposal to uncover encrypted and otherwise hidden digital information.
If Convicted of North Carolina Identity Theft, You Will Face Serious Penalties
Because filing your taxes is a type of “honor system” which requires voluntary compliance, when offenders are caught they are often made an example via prosecution to the full extent of the law including prison time, fine assessment, civil taxes, and other penalties at their disposal.
If you have been accused of identity theft by the IRS, a tax fraud attorney can review your case and help you develop a sound defense. Otherwise, you could be facing felony charges that carry a sentence of up to three years imprisonment and up to $100k in fines.