Stolen Identity Refund Fraud: An Analysis of the Perpetrator Characteristics and Comparison with Updated IRS Identity Theft Measures.

• In Event: Bias in Asset Valuations, Stolen Identity and Domestic Asset Tracing

Abstract

Stolen identity refund fraud is an epidemic in the United States and is unfortunately not going away. Stolen identity refund fraud is malicious scheme combining identity theft and tax fraud. The individual committing the fraud uses a stolen social security number to file a fictitious tax return to then receive a tax refund. This surprising simple fraud scheme is expected to exceed $5,000,000,000 in 2015 and it is continuing to grow. The IRS has been attempting to implement steps to stop this persistent fraud but their efforts to date has not been effective. The other side of this issue is the individual taxpayer who finds their tax compliance called into question, their legitimate refunds withheld and the financial and emotional toll of this fraud.
This fraud has been identified as one of the top 5 cyber frauds concerning the AICPA. Existing fraud research identifies common characteristics of both fraud perpetrators and fraud schemes, but an analysis of the perpetrator of this hybrid resulting in income tax refund fraud has not been investigated. The proposed research would analyze perpetrator characteristics extracted from criminal cases to document underlying common characteristics of the fraudster and fraud scheme. Once common characteristics have been identified, a model will be built to assess the risk of stolen identify refund fraud. The model will constructed from the elements in the prosecuted fraud and then compared to the interventions implemented by the IRS to combat this fraud. The model will consider both the characteristics of the fraudsters and the fraud scheme to determine if the IRS’s preventative measures can be effective.

Author

• Britton A McKay, Georgia Southern University