This year’s tax deadline is Tuesday April 17. Among the millions of documents headed to the Internal Revenue Service (IRS) between now and then are an increasing number of returns from tax-savvy gang members who have learned to exploit the system.

For gangs, illegal tax returns have proven to be a very profitable and low-risk crime, according to a National Gang Intelligence Center (NGIC) bulletin [1] released last December and published recently on the online document archive, Public Intelligence. The bulletin is marked “medium confidence,” which means the information is “credibly sourced and plausible, but can be interpreted in various ways.”

Street and prison gangs are expanding their activities to include tax fraud schemes, using money obtained from illegal tax returns to load up on prepaid payment cards, smuggle drugs, and supplement other “traditional criminal activities.”

Working with members on the outside or employees at tax preparation centers, prison gangs file false returns. They typically communicate through legal mail to avoid detection, the bulletin states. Individual gang members will initially file false returns using their own information, but once they find it profitable, operations are expanded to include more people on the outside – with and without their consent.

“Gangs will likely resort to intimidation tactics, committing identity theft [2], and forming alliances of opportunity with individuals and other criminal enterprises,” once they realize how viable fraudulent returns are, the NGIC bulletin states. Several examples from the FBI are provided in the bulletin:

The white supremacist gang, Arizona Aryan Brotherhood, threatens new inmates into giving up their social security numbers and personal information. Using legal mail, the information is sent to female counterparts on the outside who file the returns, the bulletin states. Bloods gang members in Georgia used money from fraudulent returns to buy guns and drugs. Members or accomplices would gather personal information from people they encountered at work, storing the information until tax season.  Both the Mexican Mafia and the Arizona Aryan Brotherhood have taken money from fraudulent tax refunds to load up prepaid cards.

“The IRS is increasingly seeing identity thieves looking for ways to use a legitimate taxpayer’s identity and personal information to file a tax return and claim a fraudulent refund,” says the IRS “Dirty Dozen Tax Scams of 2012 [3]” fact sheet.

The IRS says it’s seen an increase in complex tax schemes, but increased measures to stop fraudulent returns—like notifying taxpayers when more than one return is filed in their name or when wages are recorded from an unknown employer—have protected more than $1.4 billion from being stolen.

Douglas H. Shulman, commissioner of Internal Revenue spoke at the National Press Club [4] Thursday on the strategic strategies set for the IRS, which include combing technology and expertise to stop more fraud.

photo by soukup/flickr [5]
 

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