In July 2019 a man who formerly resided in Herndon was sentenced to one year and a day in federal prison on each of four charges (two charges of theft of government money and two charges of money laundering) for his role in tax fraud i.e preparing false tax returns, stealing the refunds, and “laundering” the money.
The defendant used the names and social security numbers of real people to open bank accounts and obtain debit cards. In late March and early April of 2015, he prepared and electronically submitted false tax returns in their names, claiming refunds ranging from $8,538 to $27,530. He had the funds electronically deposited in the bank accounts he had established for that purpose.
Once the refunds were in the bank accounts, he either made large cash withdrawals or used the debit cards to purchase money orders at a local Walmart to “clean” the money and make it harder to trace.
Is this how the defendant was identified as a fraudster? We don’t know. Perhaps one of the banks filed a suspicious activity report based on the cash withdrawals. Perhaps it was the purchase of the series of money orders at Walmart. Perhaps the scheme was discovered when one of the identity theft victims tried to electronically file their own tax return.
The real people whose identity he misused are victims here. Although it was not their money stolen, they had to deal with the ramifications of the fraudulent returns when they tried to file their own returns. The IRS would have rejected their electronically filed returns because returns had already been filed using their SSNs. They would then have to file returns on paper, and likely respond to IRS correspondence to prove they are really who they claim to be on the return. Any legitimate refunds would likely have been delayed.
Is there a lesson on Tax Fraud to be learned here?
As many commentators have noted, you should file your tax returns as early as is practical to help you avoid becoming the victim of such a fraudulent tax return scheme. So, keep this in mind as you organize your paperwork for tax return filing each year.