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Saturday, March 24 News

Fastest-growing identity theft scam hits New Canaan

Seven New Canaan residents found out last week that they were victims of one of the fastest-growing scams in the country: tax return fraud.

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IRS investigations on ID theft and refund fraud as of April 10, 2014:
Total active investigations: 1,898
Investigations initiated this year: 295
Investigations completed this year: 316
Indictments: 221
Average months served if found guilty: 48
Source: IRS.gov

A 49-year-old Lantern Ridge Road resident told police April 14 that when his accountant attempted to file his tax return, the accountant learned that the return already had been filed by another person. The man said the only information the Internal Revenue Service would give them was that the return was filed on April 8, Sgt. Carol Ogrinc said.

Three days later, the man's wife learned that someone had fraudulently filed her tax return as well, according to the police report. The 53-year-old woman said she contacted the IRS and was told an investigation is underway, police said.

On April 16, a Northolt Drive couple contacted police to report that they were also victims of a tax return fraud. The 67-year-old complainant and his 63-year-old wife said their accountant learned that the fraudulent state return was successfully filed but the federal was not, Ogrinc said. An IRS representative told the accountant that an attempt to file a federal return on behalf of the couple took place on April 7, but it was rejected due to a lack of information, according to police.

Three more complainants, a 68-year-old male from Heritage Hill Road and a 48-year-old husband and his 49-year-old wife from Knollwood Lane, contacted police April 16 to report the same problem.

Although the number of reports is unusual for a small town in such a short period of time, tax return fraud by identity theft is one of the fastest-growing scams in the country, according to the IRS.

Peggy Riley, an IRS spokesman for New England, said the agency has a special investigative unit that works with the victims and tracks down the perpetrators. She said a taxpayer's Social Security number is essentially the only information needed to attempt a fraudulent tax return.

"They get a hold of a Social Security number and they create fake W2s or 1099s," Riley said. "Then they create a false tax return and they usually try to get it in early in the season. And when the real taxpayer comes in to file their return, it looks like the refund has already gone out, and in many cases, it has gone out."

Typically, those who fall victim to the scam have to wait about six months to receive their refund, if they have one, Riley said.

"The real taxpayer has to work with the IRS to prove their identity and eventually they'll get their money, but it does take some time," she said.

The IRS announced this month that its criminal investigation department started 295 new identify theft investigations, including refund fraud, since January -- which pushed the number of active cases to more than 1,800, according to an April 10 press release. In fiscal year 2013, there were less than 1,500 investigations and in fiscal year 2012, there were less than 900.

"Identity theft is one of the fastest-growing crimes nationwide, and refund fraud caused by identity theft is one of the biggest challenges facing the IRS," IRS Commissioner John Koskinen said in the release.

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The number of sentences also is growing. In fiscal year 2011, 80 people were sentenced in connection with identity theft or refund fraud after an IRS investigation. In fiscal year 2013, the number jumped to 438 and the average prison term was more than three years.

Several of the complainants in New Canaan said they believe their information was compromised during the Target data breach, according to police. In December, criminals gained access to customers' credit and debit card information, including names, mailing addresses, email addresses and phone numbers.

Target officials have said there's no indication that Social Security numbers also were taken, but authorities suspect hackers might have used the personal information to contact victims as if they were Target representatives and try to obtain Social Security numbers.

Riley said many of the fraudulent returns are filed early in the season and online.

noliveira@bcnnew.com, 203-330-6583, @olivnelson

Nelson Oliveira|Education/general assignment reporter