IRS says fake filers are stealing refunds

Some file their taxes only to learn someone else has claimed their refund

(iStock / Luevanos)

JACKSONVILLE, Fla. – The Internal Revenue Service is warning that thieves are getting their hands on people's refunds check before the taxpayers even file their taxes.

Oceanway resident Sarah Bielling fell victim to this identity theft tax fraud this year. She's always filed her own taxes online without a problem, but this year while submitting her 1040 form, she got an error message.

"At the end of the process, it kicked it back and said that the IRS did not accept it. So I went back onto the website and it said to correct some errors. It said that my Social (Security number) was wrong, so I went and made sure it was typed in correctly, which it was, and I was given an error message to call the IRS," Bielling said.

It turns out she didn't enter the wrong Social Security number, but that someone else used her number to file before she did.

"They make up a fictitious W-2. They make up fictitious 1099s and file a return before the legitimate return, before the taxpayer has filed," said Mark Patrick, a local CPA. "You have been taken so to speak. The IRS thinks you've filed and they won't accept your return."

Experts say this type of tax fraud is a growing trend.  The IRS said it caught about 250,000 fake returns with refunds amounting to about $1.5 billion.

"Last year, from what I understand, there were over a million of these fictitious refunds that went out. So I would suspect there will be similar numbers this year," Patrick said.

The IRS says tax identify thefts are more prevalent in Florida than most states.

"We're finding most of it is the elderly, and that's coming from two situations. One, is their Social Security number is actually on their Medicare card, so anywhere that you go and use that -- which is quite often -- they potentially have access to that information," said Patrick.

The thieves leave their victims jumping through hoops. It could take up to a year for the victim to get their tax refund back.

To protect yourself from this fraud, experts say to shred papers that have your Social Security number on them. And something to keep in mind for next year: The earlier you file, the less time scammers have to try to get the refund before you do.