ABC7 investigates fake W-2's being sold online
WASHINGTON (ABC7) —
Last year the 7 ON YOUR SIDE I-Team showed you how stolen sensitive personal information can be found hiding in plain sight. Now the I-Team is back to show you how the keys to your identity are being used in fraud that ends up costing all of us. They're shining a light on how easy it is for scammers to take "your" information and turn it in to the tax man to take your refund.
There's something missing from Steve and Renee Austin's Maryland kitchen. It's the hardwood floors they planned to buy with last year's tax refund. It's a big chunk of money according to Steve, "It's $8,200 and some change that we're waiting on."
Uncle Sam is holding onto their cash because someone else tried to take it and run. The Austin's believe a data breach exposed their sensitive personal information to scammers, who then used it to file for their tax refund.
The 7 ON YOUR SIDE I-Team knows just how easily it can happen. It's likely scammers used a fake W-2, which we discovered are alarmingly easy to create and buy on the internet. We surfed the web and found scammers offering their services to help you steal someone else's money in city after city.
The ads claim fast turnaround for professional documents that include everything from tax forms to bank statements. It all can be purchased at bargain prices. And while some sellers call their documents a "novelty", others don't bother, offering their wares as passable for purposes including apartment rentals, bank loans and mortgage applications.
The I-Team talked to sellers on the phone and found we wouldn't have to supply much. They do all the work, and much of the transaction happens over text, with scammers explaining what they need and how much we'll pay.
After finding a Virginia seller, we sent him basic information and he did the rest. In just a couple hours we had W-2s and matching pay stubs in our email with verified information. And it only cost $200.
The I-Team took our paperwork to expert Paul Thompson with the Virginia Society of Tax and Accounting Professionals. He believes what we bought would pass muster and claims problems in the timeframe when W-2s are issued could make it easy to file for someone else's taxes.
Thompson couldn't see a legitimate reason anyone would be selling the kind of paperwork we found for sale.
"The only people that would want to buy something like this is somebody who's going to use it illegally," Thompson explained. "It must be working. It's like anything else in the criminal world. If it keeps working, they're going to keep on doing it."
But scammers are running into more and more obstacles. Battling back is a priority for Maryland Comptroller Peter Franchot who said, "We're seeing an absolute explosion of identity theft and fraudulent tax returns."
In Maryland in 2015, 20,000 fraudulent returns were filed according to Franchot. Those are the ones that were caught. Others get through the system, until families like the Austins file. It's at that point that those fake documents end up costing every taxpayer, because you end up footing the bill.
"When that victim files for a tax refund, that's given to some crook in Miami," Franchot explained. "We in Maryland pay their refund again. That's double."
Double payments for fraudulent returns are paid out in Washington, D.C. and Virginia as well. But all of the jurisdictions are also doubling down on efforts to go after scammers who try to fool the system.
Comptroller Franchot has proposed new legislation to better protect taxpayers. His plan would give more enforcement power to fight fraudulent filers, make the crime more serious legally and change the deadline for mailing out W-2 forms to close the window for scammers to get in first.
But Maryland, Virginia and D.C. have already teamed up with each other, and the Internal Revenue Service to share information. The goal is that when fraudsters submit bogus returns using fake documents, every jurisdiction will know.
Battling the people who facilitate the fraud is a slightly harder task though, according to Franchot.
"It's a technology arms race right now," Franchot said.
The technology used to create these documents isn't necessarily illegal. It's muddy legal water, but experts tell 7 ON YOUR SIDE it doesn't cross the line until those documents are used to actually file fake returns, or commit fraud.
The IRS is watching though, cracking down on fraud as well. Their representatives tell ABC7 more than a million returns that involved identity theft were stopped in 2015 and nearly 800 criminal investigations were initiated that year by the agency.
But victims like Renee and Steve Austin said they want even more done. They want scammers, who created the kind of fake documents that were purchased to scam them, to pay the price for helping to facilitate. The couple is still waiting on their refund, wondering how many other families will be stuck in the same predicament, thanks to scammers who play pretend on the internet.
"This was very eye opening," Steve Austin said. "As honest people, we would never assume it's that rampant out there."
And we're talking about "big money" with fraudulent returns, that often use the kinds of fake documents 7 ON YOUR SIDE found. The IRS says the 1.4 million confirmed identity theft returns it saw were worth $8 billion.
If you've been a victim of tax fraud where someone filed for your return, the IRS issues a PIN number so you can safely file in the future, once you've proven your identity. You need to contact the agency and fill out a form 14039. You can find the forms here: https://www.irs.gov/pub/irs-pdf/f14039.pdf. You'll have to file your taxes with the paper forms if you've been a victim of identity theft. If that happen, you should also file a police report and pull together copies of past returns to prove your identity. The process to dispute and get your refund processed could take 180 days, or longer.
Experts, including Brian Wendroff with the Virginia Society of CPAs, said you should also file with the Federal Trade Commission to let them know you're a victim of identity theft. Registering for a fraud alert with the credit reporting bureaus, according to Wendroff, may also help to keep your personal information from being further compromised.