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Updated: 04/05/2013 6:08 AM
Created: 04/03/2013 4:28 PM | Print |  Email
By: Beth McDonough

Tax Refund Thefts on the Rise in Minnesota

Waiting for you tax refund?  You might not be the only one.  Scammers are looking for it too.

The IRS tells us it has tripled the number of investigations for tax refund crooks in one year.  The IRS even doubled its staff to handle complaints.

Thousands of Minnesotans are waiting for money that's rightly yours.  We wanted to know, what's being done about it?  We went digging for answers.

Like a lot of Minnesotans, Alan Stender filed his 2012 return electronically, only to find out from the IRS, that a stranger had done it for him.  The sizable refund, already paid.

Stender of Circle Pines is a retired businessman. He's savvy with numbers.  He called the IRS countless times, even drove to the state's main office to straighten out the situation.  He's noticeably disappointed with the response, "I blame them as much as the people who stole my check, they're procedures are way to lax."

Security experts say cyber thieves need a name, social security number and address.  That's all it takes to create a bogus return and claim a refund.  Tax fraud has grown so quickly, it's caught taxpayers like Stender, the IRS and the tax pros at Accountability Minnesota by surprise.  "In the last two years we absolutely saw a spike," says Tracy Fischman.

The IRS' own numbers reveal a staggering explosion in tax refund thefts:  in 2008, there were 52,000 victims.  In 2011, the number jumped to one million.  In 2012, the complaints more than doubled.  The ranks grow daily. 

At Accountability Minnesota, folks help 13,000 Minnesotans file their returns every year.  Their clients often count on a refund or tax credit to get by, "it is particularly harmful for people who have looked at these tax refunds just to make their basic needs," says Fischman.

The IRS is playing catch up: dedicating twice as many investigators and developing new software to detect suspicious tax returns.  Plus, assigned a special pin number to each theft victim for filing future returns without complications.

Nine months after filing his taxes, Stender finally got his $5,300.  Don't forget the crooks kept the money too.  Stender also got a pin.  He appreciates the extra layer of security, "if it can eliminate the taxpayers from having to pay out billions of dollars to crooks then it's a good deal, isn't it?"

The IRS told us it stopped roughly $20 billion worth of suspicious tax returns from being paid in 2012.  That's up 60 percent from the year before.

As for Stender, he told us he's not worried about his taxes this year, because he owes.  Stender got help from Sen. Amy Klobuchar's office on his 2012 refund.  Last month, she proposed the Stop Identity Theft Act which calls for increased penalties and additional jail time from 15 to 20 years for tax frauds. 

Most people find out they're victims of tax refund scams by getting a rejection notice while attempting to file electronically.  If this happens, immediately file a paper return and call the IRS:  800-908-4490.

Some tips that might help avoid tax time thefts:  Don't answer email that claims to be from the IRS.  The IRS never uses email to contact people.  Don't send your Social Security Number out over unsecured websites, even for legitimate purposes.  Do shred personal documents.