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Tax Fraud, Refunds and the Easter Bunny

03.28.16 | SALT Chat

We finally made it to spring and all of us tax types are working hard to get everyone their well-deserved tax refunds. So you ask, what does the Easter Bunny have to do with tax fraud and my refund? Well, apparently there is an epidemic of refunds disappearing down the proverbial rabbit hole.

The inspiration for this blog comes from my partner, Saul Brenner, who reminded me that it is not duck season or rabbit season, but actually tax scamming season (See Saul’s latest eVisor posted on our website on March 24, 2016.) Saul tells us about some of the warnings the IRS has given, but I decided to do a cursory search of what the states are doing about this issue.

Well, they are delaying your refunds. This delay is being done in your best interest (as opposed to the state budget’s best interest) so that the taxing authorities can take additional measures to make sure you are who you say you are. As we all have read, theft of confidential information has been rampant and scammers have used this information to file fraudulent tax returns with the goal being to steal your refund.

Colorado is notifying taxpayers via its website that “in the best interest of all our taxpayers…,” measures are being implemented to detect and prevent identity theft, which could delay refunds up to 60 days. For those of you tired of doing online IQ quizzes, the Louisiana Department of Revenue has created an “Identity Verification Quiz.” Select taxpayers who receive a letter from the Department are instructed to complete the quiz before they will receive their refund. The list of measures and warnings given by the states goes on and on.

All kidding aside, tax fraud and identity theft are serious matters. Our clients will be receiving all types of inquiries they have never seen before. Some of them are legitimate; some of them are not.

Contact me at wberkowitz@berdonllp.com or your Berdon Advisor before responding to any of these inquiries. We can help you sort the legitimate state inquiries from the scam.

Wayne Berkowitz, a tax partner and head of the State and Local Tax Group at Berdon LLP, advises on the unique requirements of governments and municipalities across the nation.