WASHINGTON — You’ve heard a lot of stories of identity fraud recently, most notably at Nieman-Marcus and the University of Maryland. But there’s another way crooks are getting at your money — tax identity theft.
It’s not the same as tax fraud. It happens when crooks get your personal information and get a refund sent to them instead of you.
Herb Weisbaum, NBCNews.com’s Consumer Man, told WTOP’s Dimitri Sotis and Veronica Robinson on Wednesday that tax identity fraud is popular because the odds.
“Odds are they won’t get caught, and odds are if they do get caught, they probably won’t be prosecuted very severely.”
He adds that he’s been told that gangs that run drugs and guns are doing it “because it’s so easy and so lucrative.”
States with income taxes “are getting clobbered” by tax identity theft, Weisbaum says.
While many people are leery of what’s become known as “Big Data,” some states are using that kind of mass intelligence to fight back.
They’re using the Lexis/Nexis database to flag tax returns that look suspicious, Weisbaum says.
“If you are filing your tax return in Maryland, but the database says you live in Seattle, and you’ve never done anything public in Maryland, maybe there’s a problem with this return.”
Indiana has already found 750 fraudulent tax returns this season.
“So this can really, really work to save millions of dollars,” Weisbaum says,
Federal authorities are working to combat fraud as well, but Weisbaum says they’re not divulging their methods. He adds that this kind of fraud costs them about $3.6 billion a year.
Even if a return is flagged, Weisbaum says, it can be six months before you see your money.
The best way to fight identity fraud, he says, is to file electronically, or to get your tax return in early — crooks “try to beat you to the return.”
“Every person with an active Social Security number … is vulnerable.”