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    CNBC: Identity Theft Tops List of Tax Scams

    CNBC reports on the problems that people are having with identity thieves stealing private financial data:

    With most returns now filed electronically, all it takes is a Social Security number to file a return and claim a refund. And since many companies that provide electronic filing services offer instant refunds in the form of debit cards, fraudsters can be spending the money within days.

    The IRS puts identity theft at the top of its “Dirty Dozen Tax Scams” for 2012. As of January, the agency had active identity theft cases in 22 states, and said its fraud filters caught 262,000 fake returns in 2011 compared with just 49,000 in 2010. But authorities know it is just the tip of the iceberg.

    In Tampa, Fla., one of the earliest places where the fraud showed up, authorities say drug dealers and other hardened criminals have turned to tax identity theft instead because it is so easy, is far less risky, and, they apparently think, victimless. […]

    The Federal Trade Commission, which is the main U.S. agency monitoring identity theft, says complaints in the category that includes tax refunds have doubled in the past two years.

    On this tax day in New York, Manhattan District Attorney Cyrus Vance Jr. announced the indictment of a dozen defendants who allegedly set up a fake job placement web site in order to get Social Security numbers and other identifying information from some 300 victims. They are accused of using that information to obtain more than $450,000 in refunds from the IRS.

    By targeting the unemployed, authorities allege, the defendants were able to garner a pool of individuals less likely to have earned income to report to the IRS. That way, returns filed in their names were less likely to raise suspicion. […]

    The [IRS] says it stopped $1.4 billion in refunds from being sent to identity thieves last year, and it is working to speed up the process of resolving cases, a situation complicated by strict privacy laws surrounding tax returns.

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