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Schumer: Impose New Tax Fraud Protections

On this tax deadline day, U.S. Senator Chuck Schumer is leading the charge to protect New Yorkers from losing their refunds to identity thieves.

Schumer has launched a new push for the Identity Theft and Tax Fraud Prevention Act of 2015, which he says will revolutionize the process for taxpayers trying to resolve tax-refund fraud cases and recover stolen refunds in a timely fashion. The Democrat says that tax-refund fraud is a serious crime, which 2.3 million Americans fell victim to just last year.    "The IRS' most recent estimate is that $5 Billion a year is stolen in tax refund fraud, and, that's just the theft the IRS detected. Let me give you some numbers. In upstate New York, an estimated 30,000 victims in 2014. You add Long Island it goes to 40,420. In the Capital Region 4,100, Central New York 3,700, Rochester/Finger Lakes 4,300, western New York 4,800, Southern Tier 2,700, Hudson Valley 8,300, North Country 1,900, Long Island 10,200. And, we don't have the data for this year, but it's probably higher. That was last year."

Schumer said tax-refund fraud has increased in recent years throughout New York – and continues to increase as criminals have become more aggressive and filing with online preparers, who do little to verify their clients’ identity, has become more popular.

Dan Persing, a partner with Tully Rinckey in Albany, says "don't give your Social Security number out too quickly" and if you've become a victim of tax fraud, contact the IRS immediately.    "The next thing they need to do is file a police report, just so there is indication that they did not file a false return, that they're not improperly receiving or seeking a second return from the IRS. It's gonna be something that we're gonna see more and more of, because we've unfortunately become accustomed to giving our Social Security numbers as identity numbers."

Schumer's bill would: Require tax preparers verify identity, perhaps by the taxpayer sending a scanned copy of a W-2.  Increase penalties on tax related identity fraud, and, require that account numbers associated with prepaid debit cards be distinguishable from a regular bank account.  "Because the tax refund fraudsters typically have the IRS deposit their fraudulent tax refund on a pre-paid card. Those are untraceable. The IRS commissioner has actually called these cards 'the currency of criminals,'" said Schumer.

The legislation also would require the IRS to issue an individual’s stolen refund within an average of 90 days after a taxpayer has reported the crime, as opposed to the current average of 300 days.   

The Identity Theft and Tax Fraud Prevention Act of 2015 was introduced by Senator Bill Nelson [D-FL] and has six co-sponsors, including Schumer and Senators Sherrod Brown [D-OH], Ben Cardin [D-MD], Dianne Feinstein [D-CA], Kirsten Gillibrand [D-NY], and Amy Klobuchar [D-MN]. Schumer said that he will be pushing his colleagues to pass it out of the Senate Finance Committee so it can proceed to full consideration by the Senate, and ultimately give much greater recourse to victims of tax-related identity theft in New York this year as well as help decrease tax fraud in future years.

According to Tully Rinckey, between 2006 and 2013, data breaches exposed 22.8 million of New Yorkers’ personal records. In 2013 the costs of breaches on entities conducting business in the state reached $1.37 billion, according to a report by New York Attorney General Eric Schneiderman. A recent survey of New Yorkers by Experian found almost half of respondents claimed they or someone they knew were a victim of identity theft.

Dave Lucas is WAMC’s Capital Region Bureau Chief. Born and raised in Albany, he’s been involved in nearly every aspect of local radio since 1981. Before joining WAMC, Dave was a reporter and anchor at WGY in Schenectady. Prior to that he hosted talk shows on WYJB and WROW, including the 1999 series of overnight radio broadcasts tracking the JonBenet Ramsey murder case with a cast of callers and characters from all over the world via the internet. In 2012, Dave received a Communicator Award of Distinction for his WAMC news story "Fail: The NYS Flood Panel," which explores whether the damage from Hurricane Irene and Tropical Storm Lee could have been prevented or at least curbed. Dave began his radio career as a “morning personality” at WABY in Albany.
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