Identity Related Tax Fraud
If an identity thief can obtain the Social Security number of a legitimate taxpayer, the thief can file a fraudulent tax return and then claim the refund. Generally, this crime occurs early in the tax filing season, and taxpayers don’t know their personal information has been stolen until they go to file a return and learn that two returns have been filed with the same Social Security number. The earlier the fraudulent return is filed, the less likely it will be discovered in time to catch the thief.
This crime is also known as “stolen identity refund fraud” and may involve large numbers of fake returns being filed electronically. Instead of taking Social Security numbers and taxpayer names one by one, they rely on the help of insiders at various organizations to obtain hundreds or thousands of these numbers and names at one time. The perpetrators hope that some will get through the security screening imposed by the IRS.