The IRS counted more than 900,000 fraudulent tax returns in 2011 that totaled $6.5 billion – and that’s only counting returns that weren’t actually issued. The IRS told CNN earlier this year it could not accurately judge how much cash has been doled out to scammers.
A recent example of fraud took place in Oregon where a woman is facing charges for what Internal Revenue Service investigators are calling one of the largest cases of tax fraud in the state’s history.
Krystle Marie Reyes, of Salem, Ore. allegedly duped more than $2 million from the state by filing a false return using automated TurboTax software. Reyes reported $3 million in wages and claimed $2.1 million in returns, which worked its way through TurboTax’s system and was approved by the state.
When Reyes was taken into custody June 6, she’d managed to spend about $150,000 over a two-month period before being apprehended. Reyes’ spending spree would have continued had it not been for the bizarre scenario in which Reyes was caught. She reported the card as lost or stolen to the issuer, which apparently saw enough red flags to get the state’s revenue service on the case.
This case underscores the debate over whether the IRS should issue refunds via debit cards. On one hand, they’re a boon to unbanked Americans and enable consumers to see tax returns in under two weeks.
Oregon may have its own issues to sort out – the state reported $559 million in delinquent taxes in 2010 alone, according to Oregon Live – but tax fraud is running rampant nationwide.
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