Tax Fraud: Beyond the Home Office Deduction

  • Identity Theft

When you think of tax fraud, images of inflated personal deductions, skipped payroll tax, or unreported offshore investments come to mind. The extreme tax evaders make headlines this time of year (think Wesley Snipes) and provide a little entertainment while we collect W-9s and sweat out late-night Turbo Tax sessions.

According to the US government, wage and tax fraud being committed is rising at an alarming rate, and the criminals are getting smarter. Instead of filing false information on their personal tax returns, theyll steal your identity and file a false return in your name. By the time everyone figures out whats happened, a lovely (and fraudulent) check has been sent to the fraudster, courtesy of the US Taxpayer. The AP recently reported, twenty four percent of the 279,000 identity theft complaints last year came from people concerned their Social Security numbers had been stolen and used to fraudulently file for tax refunds or apply for jobs. Thats an 8% rise from the year before.

The identity theft epidemic is evolving and now hitting the IRS. I have yet to see an explanation of what happens to the victims. Are they on the hook to repay for the fraudulent returns? The IRS isnt always sympathetic. Its becoming increasingly important for individuals keep their personal data secure and monitor credit bureaus routinely. Its even more important for the merchants and processors to ensure their clients safety by deploying fraud prevention tools, like knowledge based authentication to help ensure their clients information stays safe.

[Contributed by Jeff Davis, President & CEO]