Tax fraud linked to identity theft is costing taxpayers plenty. Even as the Internal Revenue Service (IRS) scrambles to try and contain it, the headlines were filled with stories earlier this year about taxpayer information which was stolen and used to file bogus tax returns claiming millions in fake income tax refunds.
The epicenter of much of the fraud can be found in south Florida. The mix of older residents (who easily offer up their identification at doctor’s offices) and proximity to Puerto Rico (where residents are US citizens with Social Security numbers but may not be required to file federal income tax returns) makes the area ideal for crooks looking to commit fraud.
Now, the feds are saying enough. The Financial Crimes Enforcement Network (FinCEN) has issued a Geographic Targeting Order (GTO) aimed at combatting fraud. Under the GTO (downloads as a pdf), check cashing companies in two South Florida counties, Miami-Dade and Broward, must use verify identification before cashing federal income tax refund checks.
Under the GTO, prior to cashing any federal income tax refund checks over $1,000, a check casher in the two target counties must ask for a copy of the taxpayers’s identification and the taxpayer’s phone number. In addition, the check casher must take a digital photograph of the taxpayer at the time of the transaction and retain a copy of the taxpayer’s thumbprint (the latter is actually Florida law). The new requirements take effect on August 3, 2015 and will stay in place through January 30, 2016. That time frame, according to the GTO, marks a period when the proportion of fraudulent tax refund transactions is relatively high compared to the total volume of transactions. The idea is that it will minimize the burden on affected check cashers while targeting criminals.
FinCEN is hopeful that these additional measures will make it more difficult for fraudsters to cash stolen refund checks. It will also aid in prosecution efforts. FinCEN Director Jennifer Shasky Calvery says that the GTO “will help ensure that the perpetrators of these schemes can no longer hide their face while our national treasury is looted and innocent victims spend countless hours and personal expense working with government to reclaim their true identities.”
The GTO was issued in close coordination with the IRS and the U.S. Attorney’s Office for the Southern District of Florida (SDFL) as part of the South Florida Identity Theft Tax Fraud Strike Force. The strike force was put together in an effort to tackle the rising problem of tax fraud linked to identity theft. The two counties targeted in the GTO, Miami-Dade and Broward, report rates of tax fraud linked to identity theft that are among the highest in the country.
Noting that the State of Florida and IRS Criminal Investigation (IRS-CI) have dealt with an increase in this kind of fraud, Chief Richard Weber, IRS-CI said, “By issuing this Geographic Targeting Order, the Treasury Department has put a roadblock in the path of those who would steal another person’s identity. This GTO will make it difficult for these criminals to reap the rewards of their actions and the end result will be fewer losses to the U.S. Treasury and taxpayers.”
Of course, not all crooks use checks to commit fraud (though these guys did). This move isn’t going to stop fraud but at least in South Florida, it might just slow it down.
