Using little more than Social Security Numbers, names and addresses, thieves are filing tax returns and receiving government mailed cheques and cash cards which they then cash.
When the legitimate person then goes to file their tax return later they first get an error message, and then are pulled into a complex web that may include identity theft, long delays to get their legitimate refund, and a host of other issues.
A number of innovations have conspired to make this situation, including internet accessibility of personal information (such as Social Security Numbers), electronic filing, the use of convenient mailed out “cash cards” as a payment method, originally designed as a tool for people without bank accounts, and others.
In testimony before Congress, an IRS official suggested that in 2010 there had been at least 940,000 fake returns, netting thieves $6.5B, and possibly substantially more.
The introduction of new technology, often coupled with related additional “innovations” can lead to a whole host of unintended consequences. The continuous looking around new corners is a critical part of effective risk management.