American Greed

Identity thieves want your tax refund. Some would kill for it.

Identity thieves want your tax refund. Some would kill for it
Identity thieves want your tax refund. Some would kill for it

Criminals are out in full force this tax filing season hoping to steal your Social Security number and collect a refund in your name faster than you can say "standard deduction."

The crime that law enforcement officials call SIRF — Stolen Identity Refund Fraud — remains pervasive despite a massive, multi-agency crackdown that has been going on for years.

 "It's one of the most lucrative ways that thieves can monetize our identity credentials," said Eva Velasquez, president of the California-based Identity Theft Resource Center.

 Armed with little more than your name, birthdate and Social Security number, a crook can file a fraudulent tax return and collect a refund. Then, when you go to file your legitimate return, the IRS blocks you because its records show your return has already been filed.

 "This method of fraud is so attractive because it's so easy to perpetrate," Velasquez said in an interview with CNBC's "American Greed."

"These thieves don't really have to have a high skill set in hacking or know how to code or even really understand how all of those mechanisms work."

 No wonder SIRF was a favorite crime of serial fraudster Chimene Onyeri, whose arsenal included skimming credit and debit card numbers — financial schemes that allowed the 32-year-old aspiring rapper to rake in big money with seemingly no risk.

 "He painted himself as Robin Hood. But I think the evidence showed he was just a hood," Assistant U.S. Attorney Gregg Sofer told "American Greed."

 Onyeri turned violent only when it looked like he might go to prison for his crimes. That's when he tried to kill the Texas judge who was preparing to sentence him, pumping four bullets into her at point blank range in her driveway as her teenage son watched in horror.

Chimene Onyeri
Sugar Land Police Department via AP

Judge Julie Kocurek survived, and in 2018, a different judge — this one in federal court — sentenced Onyeri to life in prison for fraud, conspiracy, witness tampering, aggravated identity theft and racketeering. Onyeri was also ordered to pay more than $178,000 in restitution. 

Playing the numbers

Most tax refund identity thieves keep a much lower profile, but the numbers involved are staggering.

In an audit report released in January, the IRS government watchdog — the Treasury inspector general for tax administration — said that in the 2019 filing season, the IRS identified more than 3 million tax returns worth an estimated $14.7 billion in refunds that may have been fraudulently filed. That figure is little changed from the 2.8 million returns worth around $16 billion that were flagged for potential fraud in the 2018 filing season.

The inspector general said the IRS is making progress in catching fraud before the refunds are issued, thanks to nearly 200 new identity theft filters applied to every return. But the crooks are still finding ways around them.

"The IRS must continually adapt its detection and prevention processes to reject fraudulent electronically filed tax returns and prevent fraudulent paper tax returns from posting," Inspector General J. Russell George wrote in an October memo to Treasury Secretary Steven Mnuchin.

Compounding the challenge for the IRS, Velasquez said, is a web of privacy-related laws and regulations that limit the agency's ability to verify taxpayer data.

"We need more smart data-sharing in order to really tackle this crime, and we need to empower our government agencies to have the ability to both share and receive data from a variety of trusted sources," Velasquez said.

Protecting yourself

For now, it is largely up to you to take on the identity thieves and make sure you receive the refund you are entitled to. That means getting your documents together and filing your return as soon as possible.

"As soon as you get those documents, go ahead and file and reduce the chances that one of the crooks who has your data can file ahead of you," Velasquez said.

All year long, guard your personal information — especially your Social Security number. 

"We are always encouraging people to protect their data, protect their identity credentials. They are just as valuable as your cash in the bank," Velasquez said. 

If you believe your personal information has been compromised — if you lose a wallet, a computer or a smart phone, for example — be sure to notify the IRS along with your bank and credit card issuers. The agency may issue you an identify protection PIN that you can use when you file your taxes, preventing anyone who does not have the number from filing with your information. Then, make sure you guard that PIN along with the rest of your personal data.

 And do not forget to notify your state tax agency.

"Thieves can only use your Social Security once in the federal scheme, but they can use it multiple times if they're filing fraudulent state tax returns, and that is a real problem," Velasquez said.

 SIRF wars

If, despite all of your precautions, your find that your legitimate return has been blocked by an identity thief, you will be in for a long and potentially frustrating process. But there is a process in place, and you can get through it.

 Do not delay contacting the IRS. You will learn about filling out an Identity Theft Affidavit, which you can attach to the paper copy of your return that you will file. If you believe a fraudulent return has been filed in your name, you can request a copy of that return.

Chances are that just like Onyeri, the thief has other crimes up his sleeve and is also using your stolen information for things beyond filing a tax return. Examine and monitor all of your accounts. The Federal Trade Commission has tips, and the Identity Theft Resource Center has people who can help. 

"The first thing we're going to tell people to do is get some help," Velasquez said. "It can be really confusing, and there are a lot of resources out there for you."

See how far Chimene Onyeri was willing to go to keep his dirty money flowing in. Catch a shocking ALL NEW episode of "American Greed," Monday, March 9 at 10P ET/PT on CNBC.