Tax Refund Loans attract fraudsters

There are a lot of people trying to scam tax preparers and the government.

Part of the problem is that W-2 forms are easily purchased at just about any Office Supply store and forged.

KGO, San Francisco (Alan Wong) reports:

The latest trend in tax fraud has made its way to the Bay Area and it could be costing the federal government millions.

People are being enticed to cheat Uncle Sam and then split the take.

The goal is to get these tax preparers to give them a loan (refund anticipation type) and walk out with about $6,000 - $8,000 in cash.

Fraudsters recruit low income/unemployed people to go in with the forged W-2s and get these loans.

KGO story, here.

Of course, those who get recruited will end up holding the bag if the IRS discovers this happening and takes the matter for prosecution. My guess is the people recruited will bear the brunt of any punishment because their information is being used, and the fraudsters (recruiters) will disappear in the mist.

These recruiters can be reported to the IRS, here. Of note, they mention that anyone reporting criminal activity might be entitled to a reward.

Here is a previous post, which covers all the scams the IRS looks for this time of year:

Don't be lured with promises of something too good to be true when filing your taxes

Identity theft is also becoming an issue when people try to file their taxes. A lot more than W-2s are being counterfeited these days.

News 25 (Peoria) is reporting how people are going to file their taxes and discovering someone else has already filed using their social security number.

News 25 story, here.

I wonder who will be liable for all the problems a taxpayers faces if their identity is stolen, and someone issues one of these handy dandy refund anticipation loans to a fraudster?

Unfortunately, my guess is that the identity theft victim will suffer the most.

Clearing up problems with the IRS can be a painful experience.