Fairfax County Fraudulent Tax Refund Scam Underway – What is the County Poliice Department Doing About it?

Fairfax County Police Take Complaints of Tax Returns Falsely Filed Under County Resident Names

More than 75 Fairfax County residents have had false tax returns filed in their names with the IRS — and the big question remains, what is the Fairfax County Police Department doing about this?

More than 75 people have called Fairfax County Police complaining their identities have been stolen and false tax returns filed in their names.

Lucy Caldwell, a county police spokeswoman, said taxpayers don’t realize they have been victimized by the false tax return filing scam until they actually file their own tax returns. At that point, the IRS has reported to them that their returns have been received already. Victims are being told by the IRS to call their local police department, Caldwell said.

“Here in Fairfax County, they [the crime victims] file an online report and will receive their number electronically from our system,” Caldwell said. “Supervisors in the Financial Crimes Unit mentioned they feel this is a growing problem. It has happened in recent years but seems to really be increasing every year and is on the rise.” On the county website, there is substantial and constructive advice on how to proceed if you are victimized by financial crime, including contact information to the three major credit bureaus, where you can dispute debts incurred through fraud.

So, how does this scam work exactly? It likely requires use of stolen social security numbers and names of taxpayers, with a falsely filed return listing a refund due to the taxpayer, and probably further requires a bank account disclosure to IRS where the refund can be transmitted electronically to the fraudster’s account in lieu of the taxpayer receiving the funds.

Have the County Police asked for copies of the falsely filed returns to see what account numbers and addresses were provide for the presumed refund claims that would most likely be the payoff for such a fraud? What about the required identity information now required before a bank can open a new account, is that banking information being sought by the police? Whose names are the accounts in, where were they set up, and how many refunds have been processed and paid out to those accounts by the IRS?

Caldwell was reported to have said to the online news site, the “Fairfax Patch”, that County detectives could do little to track suspects in the cases. Her suggestions for solving or preventing similar crimes was then offered, most of which are entirely self help measures we all could benefit from, but left unanswered the issue of what the police are doing to apprehend these fraudsters. Here are her suggestions for the public:

Limit the occasions you share your social security number with others.
Do not voluntarily give your social security to others.
Closely monitor your credit reports to catch potential fraud early.
As odd as it sounds, closely monitor your children’s credit reports as well; thieves are known to steal children’s social security numbers as well.
Virginia residents CAN have a customer identifier on their driver’s license in lieu of their social security number.
Shred all personal information at home prior to trash disposal.
Opt out of pre-approved credit applications by calling 888-567-8688.
For more information on financial crimes, click here.

One thing is clear, when your identity is stolen and a false tax return is filed in your name, you could end up with a huge tax bill. First, the IRS is likely to accept your properly filed return as an amendment to the originally fraudulent return. Then, it can charge you the improperly paid refund when your correct return shows a smaller refund or no refund was due. Then, it could charge interest and penalties on the refund that was overpaid if you don’t pay it back on time.

So, what does our police department recommend about that problem? Are they willing and able to go to bat for the innocent victim and intercede with the IRS to confirm a fraud report was filed, and that the IRS should absolve the taxpayer of any improperly paid refund claims?

With all the resources available to track bank fraud available to local and federal investigators under the Patriot Act and similar antiterrorism laws, this being a typical example of such crime, why do the police say it is unlikely these fraudsters will ever be caught? How many crimes like this occur each year in Fairfax County, and what is the solve rate for these crimes by our Financial crimes Unit?

When checking the Fairfax county Police Department crime statistics, the 2009 data on the police website reports an internet access error. For 2008, the latest data (which itself is strange that the most recent data posted is over five years old), does not even provide a separate category for financial crimes or identity/fraud crimes. If we look at the generic heading of “larceny” or “property crimes” which could include identity theft or fraud, we can see that this category of crime is the overwhelmingly most common crime committed in the County, and increased by over 14% from 2007 statistics.

Looking a little deeper into the County’s website, we did find a Chief’s annual report from 2011 that summarized financial crimes as totaling 1961 reports, with only a 24% solve rate for 2011, the lowest solve rate for any crime category in the report. Elsewhere in the report, a total of 2,601 fraud crimes are listed for 2011, of which some are presumably within the designation of financial crimes.

So the question must be asked, what priority is being put on these financial fraud crimes? How many line officers and detectives are assigned to the county’s financial crimes bureau? Are there active liaison efforts underway with the FBI if the crimes are shown to involve interstate activity? What resources are being brought to bear on this important issue, and how many of our citizens are left wondering what is going on about these crimes? We are owed some answers from the Police Department on these issues!