Protect Yourself Against Identity Theft

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Identity theft can be a huge headache, especially when it affects your federal tax record.  There are at least a couple ways how that might happen.  An identity thief may use your personal identifying information, including your social security number, to file a false tax return and obtain a fraudulent refund.  Or a thief may use your identity to obtain a job, claim the maximum number of exemptions, and basically collect tax-free income.  Then, these W-2 wages are reported to the IRS under your social security number.  When the information on your legitimate tax return does not match up with the W-2s the IRS has on file (i.e., when you fail to report the income earned by the identity thief) then the IRS sends you a letter asking you to explain the discrepancy.

The IRS provides a comprehensive list of tips for those whose identity has been stolen.  However, some of their most useful tips explain how to avoid identity theft in the first place. What it all comes down to is safeguarding your personal and financial information, including your credit cards, social security number, even address.

Some identity thieves steal wallets and purses.  Protect your personal effects when you carry them around and never leave them in open sight in your vehicle.  Never leave a bag or purse unattended in a store or airport.  It is human nature to misplace small items such as these, but we tend to be very habitual in the handling of our wallets and purses.  The more safe habits we can acquire, the better, so that it becomes second nature to protect our personal effects.

Some identity thieves try to obtain information from you through a phone call or electronic means (especially emails).  The IRS has issued extensive and repeated warnings regarding phony IRS emails and phone calls.  The IRS has made it abundantly clear that they do not contact taxpayers through email and they do not request credit card information over the phone.  It is actually really easy to identify a phony IRS contact if you know what to look for, but very easy to be deceived if you don’t.

Some identity thieves sift through your trash.  Once you take your trash out to the curb, it is easy to consider it “gone,” but that is usually the point at which the identity thief just begins his work.  The idea here is to take steps to destroy identifying information before you throw it in the trash can.  Invest in a good quality shredder and make a habit of shredding anything with your name on it.

Some identity thieves obtain your information through unsecured websites.  Do not share your personal and/or financial information on obscure, unknown websites that cannot be trusted.  If you’re making purchases online, stick with the big time, well known websites like Amazon, eBay, and nationwide retailers.  If you ever have a question as to whether a website can be trusted, do a quick Google search of the company or, better yet, just move along to something else.

Manteca Tax Cheat Files Lien Against IRS Commissioner

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There was a story I saw in the Modesto Bee recently about a Manteca woman who pleaded guilty to defrauding the IRS out of about $313,000.  It is not really your typical refund fraud case in the sense that the more popular strategy involves preparing a series of false refund returns claiming smaller amounts.  All the returns together may add up to a small fortune, but no single refund claim appears right away to be anything out of the ordinary.  The Manteca woman wasn’t patient enough for the “slow drip” method apparently; she went all in.  And she lost big time.

Esther Robertson, 57, faces up to 5 years in federal prison and a fine of $250,000.  It is not mentioned in the Modesto Bee story, but typically the fine is in addition to the restitution aspect of the sentencing, which involves the taxpayer paying back what was stolen.  Robertson will have a lot of time to stress about the possible outcome since her sentencing is not expected until September 2015.

Court papers also indicate that, in February 2009, after the IRS was onto her, they issued a bank levy to try to recoup at least some of what was taken.  Then Robertson did something that I’m not sure I quite understand.  Presumably in an act of retaliation, she filed a lien against the property of the IRS Commissioner!  This certainly shows her contempt for the IRS, or the federal government, or both.

There are a number of questionable websites and online sources that claim to cite legal authority for filing a criminal suit against the IRS for taking one’s property.  I won’t link to any of these sites because I don’t really have a beef with them but, trust me, there are hundreds of them.  These are the same sites that are managed by tax protestors who believe taxation is illegal and the IRS has no legal authority to collect taxes.  My guess is that Robertson found  something online about filing a lien against the Commissioner of the IRS and she thought she would give it a try.  She probably didn’t have much to loose at that point either, knowing that the IRS had discovered her foul play and it was only a matter of time before she would be getting a visit from Criminal Investigations.  For Robertson’s sake, I hope this doesn’t count against her during sentencing.

Memphis Woman Gets 22 Years for Tax Fraud

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A Memphis woman has recently been sentenced to 22 years in prison and ordered to pay nearly $700,000 in restitution after her tax fraud scheme was shut down by IRS Criminal Investigation.

Aundria Bryant-Branch, 38, was providing stolen social security numbers and other sensitive data to third party tax return filers.  The information was obtained from the Memphis Police Department. The news stories do not identify Bryant-Branch as a former employee of the Memphis Police Department, but it seem clear that she was either an employee or a contractor/vendor who would have had access to the confidential info.

The other parties involved in this scheme were responsible for filing the false tax returns and bilking the federal government out of thousands of dollars during the period 2006-2008.

For information about legal tax relief programs, call Montgomery & Wetenkamp for a free attorney consultation.

San Diego Couple Busted for Alleged Tax Fraud

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Dr. James Francis Murphy, 51, and his wife Denine Christine Murphy, 49, from the San Diego area, ran a successful medical practice.  But while Dr. Murphy was providing pain relief to his patients, he must have been sneaking toxic doses of tax relief for himself.  According to the indictment, their crimes were “corrupt interference with the administration of IRS laws and presenting false claims to the United States for fraudulent income tax refunds” over a period of about 10 years.

This story illustrates the fact that there is no one demographic for those who would cheat the system by either failing to pay their fair share or by scamming the government out of money by way of false refund claims (or both).  Many of the criminals as of late tend to be trafficking in stolen identities straight off the streets of Tampa, FL.  But there are plenty of sophisticated “professionals” who are scam artists too.

One would expect that the more sophisticated tax criminals would engage in elaborate, complicated transactions to suppress their tax problems and make a buck, but Mr. and Mrs. Murphy preferred to keep it simple.  Their master plan included the following basic components:

  • hide income
  • claim huge unjustifiable refunds
  • pay taxes with checks that bounce
  • threaten IRS employees

See full story here.