MIAMI (CBSMiami) – Tax refund scams are not new, but they’re costing Uncle Sam, and by default, you, as much as $10 billion a year and the current laws may not be strong enough to protect taxpayers from sophisticated tax thieves.
That was the message given to the Senate Finance Subcommittee on Fiscal Responsibility Tuesday. The meeting was chaired by Florida Senator Bill Nelson who started the hearing by quoting a recent CBS4 investigation on the growing problem of tax scams.
“This is a serious crime that as a South Florida prosecutor recently described as an epidemic,” Nelson said Tuesday. “People describe it as cocaine on a card, that’s what the prosecutor told the CBS affiliate in Miami.”
CBS4 has previously reported on the growing problem of tax refund scams and how they are going from bad to worse across South Florida.
Investigators said well-organized cyber thieves as far away as the former Soviet Union are now tapping into the IRS’ E-file computer system. With the help of readily available software, they can easily generate and file phony tax returns using whatever name and social security number they’ve stolen.
After hearing about the growing numbers of tax fraud investigations and arrests booming in Miami and Tampa, Nelson decided to propose increased penalties for cyber-thieves convicted of filing fraudulent tax returns and allowing the IRS to better coordinate investigations with local police, which they can’t do now.
“Clearly CBS in Miami did a great public service,” Nelson said. “I think it’s getting worse and I think it will continue to get worse and what has been uncovered in Miami and Tampa is only the tip of the iceberg.”
Over the next few months, Congress is expected to consider new laws cracking down on tax return scams, but that’s too little, too late to help victims during this tax season.
The new bill, according to Nelson will:
- Strengthens penalties for tax fraud through identity theft and the improper disclosure of taxpayer information;
- Gives all ID theft victims a unique personal identification number (PIN) to include on their tax return to prevent fraud and avoid tax refund delays;
- Allows identity-theft victims to “opt out” of the electronic filing of their federal tax returns;
- Secures the Social Security numbers of deceased Americans so that fraudsters cannot use them to file fake tax returns;
- Reallocates IRS resources for tax fraud prevention and detection;
- Improves coordination, cooperation, and communication between the IRS and local authorities in criminal investigations; and
- Permanently extends the authority for the IRS to share information with federal and state prison authorities.
The IRS asked taxpayers who believe their refunds may have been stolen to contact the agency as soon as possible at 1-800-908-4490.