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Tax Refund Theft Is Biggest Scam of Tax Season

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(Credit: CBS)

(Credit: CBS)

DENVER (CBS4) Identity thieves are filing people’s taxes and stealing the refund money. The Internal Revenue Service calls it the biggest scam of the tax season because the reality is it’s not hard to get someone’s personal information.

Thieves use the names of legitimate taxpayers to file fraudulent online tax returns. They are trying to file the return before the actual taxpayer and beat them to the refund.

“I got an alert today saying that my taxes have already been file, and I have not filed them at all,” said Vanessa Dowe, a victim of this scam.

Criminals have her Social Security number and other personal information. They filed an online tax return using her name and a fictious income. The IRS does not verify the employer W-2s sent with the return until after the refund is issued.

The Colorado Bureau of Investigation reports hearing from two to three victims a day as the early returns were being filed. The Criminal Investigation Unit of the IRS in Denver confirms that there are cases happening in Colorado. The IRS is aggressively pursuing these criminals. The latest case led to two indictments by a federal grand jury in Denver.

“Stole identities and filed about 2,000 tax returns and received or attempted to receive about $1.8 million in fraudulent refunds,” said Special Agent Bryan Thiel with the IRS Criminal Investigation Unit.

The Federal Trade Commission says it’s now getting about 50,000 identity theft complaints a week, mostly tax refund thefts. In the end it could cost the federal government billions of dollars.

“What happens if you are a victim? If someone has claimed your tax refund before you?” 4 On Your Side Consumer Investigator Jodi Brooks asked.

“Well, the IRS will work with you. Unfortunately, it doesn’t happen overnight. It takes a little bit of time but the IRS will work with the taxpayer,” Thiel replied.

In most cases, the criminals buy a debit card so the IRS can issue the refund on that card. Although some thieves have received their returns on actual treasury checks.

The best way to protect yourself is to practice basic identity protection:

– Do not give away your personal information.

– Do not carry your social security card in your wallet.

– Do shred all important documents that contain personal information.

RELATED: More Reports By 4 On Your Side Consumer Investigator Jodi Brooks

- Written for the Web by CBS4 Special Projects Producer Libby Smith

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