I was listening to the news last night and evidently the latest scam is people get a hold of your social security number and file a tax return. They get the money and you get screwed.
The news says you can clear it up but it may take up to a year to do it.
I don’t know if this is just more paranoid blather or real. First question is how could you prevent it? I really don’t understand how the scammers are doing it?
I am not looking for a how to guide, but can somneone give me a jist of how this would work?
I would be wondering how the scammer could possibly do this anonymously. Is there a little-known option where the IRS gives you your refund as an envelope of unmarked small bills dropped off in a garbage can in a local park?
It seems like any of the usual options, direct deposit or cheque, would have a pretty solid paper trail to the person who did the scamming when it was challenged later.
I was also wondering - how do you file a tax return in somebody else’s name without having access to their income documentation forms? Or do they just make up some numbers that would get them a decent return, and even if the proper person files an adjustment, they’d be out for the amount of money ‘returned’ to the scammer’s address?
It’d be funny if the IRS came to the scammer’s address to audit the person.
My brother’s girlfriend’s parents were in the same nursing home. The place used SSNs to keep track of the residents (always a bad idea). The Nigerians hired by the place filed false tax returns on both of them, getting refunds of nearly $300,000, electronically deposited.
The Nigerians were eventually caught and deported, but as the money was already gone, my brother’s girlfriend was forced to pay it all back by the IRS. She’s on the verge of losing her home.
Whoa, she got terrible tax representation advice. Sure, she’s technically responsible for that money, but no halfway decent tax representative in the world would have advised her to just pay it- there are lots of other options.
This doesn’t sound very plausible to me. First, a refund of $300K requires that you’ve paid the IRS $300K - at least. They really never figured out the residents didn’t? Plus it would involve a gigantic one year income spike. And Nigerians?
I’ve read about real scams, including I think paying someone to minimize or file your taxes for you, and signing over your real return, but I’d want a cite for this story.
Not to mention that I don’t get why your brother’s girlfriend would be responsible for the debts of her parents.
When it comes to cases of identity theft, the IRS generally has a “collect first, prove it wasn’t you later” plan of attack. You can be working out the identity theft or fraud portion in one department, but the collection department will come down on you like a hammer regardless. That could mean levying the vast majority of your pay check, cleaning out your bank accounts, etc. Until the theft/fraud portion is resolved (IF it can ever even be resolved), you are considered to be a tax debtor who will have an active collection case. It’s illogical, but that’s how it happens.
And the I.R.S. never questioned that they earned enough money to get back $300,000 yet still lived in a nursing home? I’m sorry, but a story like this begs for a cite.
Not clear the parents are even dead. Plus did the thieves sign the girlfriend’s name on the returns? I can see coming down on the taxpayer who was scammed, but on their children?
I don’t think the scammer in this story is Nigerian, and I don’t mean gaffa.
Even allowing that collections would be bringing down the hammer before the fraud was cleared up… wouldn’t the fact that the Nigerians were deported indicate that the fraud was pretty clear at this point? Along with the rest of the points about the ridiculous numbers – a quick comparison to the last few tax returns would seem to indicate that something shady is going on.
With numbers that big I’d be really surprised that the IRS didn’t automatically flag it well before they got to the point of sending any money.
It’s different with the IRS. They can garnish up to 90% of your gross. They can also have a lein put on your home and land, then have that lein foreclosed on in order to get their money.
Thing might have changed in the past 5 years, but that’s how it was when my mom’s ex-boyfriend ran afoul of them.
The IRS has a special unit that deals with tax issues that have resulted from identity theft. They do what they call a resolution of the account along with the criminal prosecution, and her parents wouldn’t have owed a red cent.
She’s B.S.ing you gaffa. There is no way her parents through the process and then the IRS goes after a third party who magically agrees to pay a 300k debt that isn’t theirs. Not to mention, the IRS doesn’t have the authority to go after people who aren’t on the return either.
Not for the IRS. In California, the state agency is limited to 25%, but the IRS can take as much as they darn well please. Ok, that’s not true- they are supposed to allow for paltry living standards based on the number of exemptions you’re claiming on your W4. This is the garnishment chart from the IRS (and this is for wage garnishments, not bank levies. So, looking at that, if you’re single, all alone, and get paid biweekly, they’ll garnish everything but $375 per check. This is, of course, without any intervention or contact from either you or a representative on your behalf.
A bank levy, otoh, just takes out either 1:the full amount owed or 2: the full amount in your bank account, if it’s less than the full levy amount. So, for example, let’s say you owe the IRS $300,000. In your bank account, you have $25,000 sitting in a savings account. They’ll levy your account for up to $300,000, but since you only have $25,000- they’ll take just that. I see people all the time get levied for huge sums of money. . . but the IRS only gets $5 or $10 because that’s all they leave standing in their accounts.
As I mentioned, things are more complicated on a state level. In California, the Franchise Tax Board can take up to 25%. . . BUT if you owe child support, that complicates it further. If you are paying back child support via court order and it is taking more than 25% of your check, you can’t be expected to pay any back tax via levy until the child support is paid up. BUT if you are, for instance, paying 18% of your check toward back child support, the most the FTB can garnish you for is 7% of check. I hope I explained that well enough that it makes sense :).
This is more or less right, except they VERY rarely actually collect on a lien through seizure. The reality is that most folks don’t have equity in their homes anyway, so that’d be pretty pointless on the end of the IRS. The real reason they put liens on everything isn’t seizure, but just that they can collect when you do sell it (if you don’t get it temporarily removed).
Look, I’m with you. What you’re saying makes absolutely logical sense. . . unfortunately, the IRS is notorious for not exactly working well with other government agencies. Or even, hell, one branch of the IRS with another branch. I’ve seen cases where the fraud division puts holds on accounts, but the collection division still acts.
But you’re right: a refund that big would almost certainly flag something. It deviates WAY too far from the average.
If I had to guess what really happened to friend: mom and dad started a shady business under their daughter’s name, racked up a huge tax debt, and she had to deal with the repercussions of that. I see it all the time, unfortunately. Why lie? Probably because it’s a lot easier to blame a Nigerian scammer than admit your parents tried to fuck you over.
As I said, her parents were in a nursing home. Her mother was suffering from Alzheimer’s, her father from non-Alzheimer’s dementia. As neither was legally competent, she had power of attorney for both.
I have copies of the false tax returns. DiosaBellissima is correct, their policy is “collect first, refund later” (if ever). As she had control of their estate, she was responsible for their debts.
The Nigerian, who had been hired as a caregiver at the nursing home, was deported.
Bite me. Every single bit of this is real, happened and is documented.
No, the parents had a solid paper products company in Massachusetts that they sold to a larger competitor. When she had to take over their estate, it had assets of over one and a half million dollars. She put them in a highly respected nursing home in Kansas City, Missouri run by the church that her parents had been members of her entire life.
