I-Team 10 Consumer Alert: Tax Refund Fraud

Posted at: 04/11/2013 7:53 PM
By: Brett Davidsen

The tax deadline is just around the corner. It's also a time of year when scam artists are working overtime finding ways to cheat the system.

It involves identity theft and tax fraud. The scam cost the taxpayer $6.2 billion last year alone.

Bob, fraud victim, said, "They asked me if I had seen or noticed anything unusual in my neighborhood. (Had you?) Absolutely.”

Bob did not want to show his face as he discussed suspicious activity linked to a multi-billion dollar scam. It starts with the theft of Social Security numbers belonging to residents of Puerto Rico. It ends with major theft from the U.S. Treasury.
Undercover Agent said, "Puerto Ricans generally do not file federal income tax returns, but they are issued Social Security numbers, so the fraudsters will steal the Social Security numbers, dates of births and bring them up here to the United States to file federal income tax return checks."
The con-men direct the IRS to send the refund checks to an address of someone they know or to easily accessible mailboxes like at Bob's house.
Bob said, "This came to my house, I had no idea who it was for and wrote return to sender right here and took it to the post office. I thought it was strange, because it came in September."
Inspectors say Bob did the right thing.  

Undercover Agent said, "We've intercepted billions of dollars in fraudulent federal tax return checks."
Inspectors say they have done surveillance and undercover sting operations to arrest people in this scheme.

Undercover Agent said, "We want our postal customers to inform us if they have received such type of checks in their mailbox."

In January, a Rochester man, Juan Marie Delvalle pled guilty to taking part in one of these tax scams. Authorities say he retrieved refund checks sent to Rochester and then forwarded the money to people downstate who were responsible for the filing the fraudulent returns. Investigators say 70 false claims totaling $386,000 were filed using addresses linked to Delvalle.

In the meantime, the IRS says it has expanded its efforts to better protect taxpayers this filing season. To stop identity thieves up front, the agency says it has increased the number of screening filters that spot fraudulent tax returns before refunds are issued.