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Income Tax Fraud Hinges on the W-2

We’ve written before about the growing problem of income tax fraud in the United States.  With the ease and speed of filing tax returns electronically and receiving refunds the same way within a matter of days, rather than weeks or months, unscrupulous individuals have discovered that income taxes fraud pays pretty well, even when compared with other crimes.

Income Tax Fraud

The crime of income tax fraud starts with simple identity theft; one only needs to have someone’s name and Social Security number in order to file a fraudulent tax return on their behalf.  The thief can change the mailing address on the 1040 form and have the refund sent to an address of their choosing or to a bank account or even a debit card.  Most income tax fraud happens relatively early in the tax season, as the crime only works if the thief can file a return before the person who actually owns that particular Social Security number can file their own return.  It’s easy to do, since employers aren’t required to mail W2 forms to their employees any earlier than the first of February.  At that time, they also send duplicate copies of those W2 forms to the IRS, ostensibly so that the agency can compare the information on the W2 they receive with the information supplied on the tax return.

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