Stolen Identity Income Tax Return Fraud (SIRF) is a type of scheme that has, unfortunately, been sweeping the nation. However, when we hear about these schemes we typically assume that they are occurring in far-off parts of the country and affecting people other than ourselves and individuals we may know or come in contact with. Unfortunately, tax fraud schemes affect all parts of the country including Los Angeles and the surrounding areas.
In a recent court appearance, a Los Angeles Man pleaded guilty to his role in an SIRF scheme. He is the fifth of six individuals indicted in this matter. Five of the six have pleaded guilty to various tax and fraud charges.
Stolen Identity Income Tax Return Fraud (SIRF) is a type of scheme that involves the synthesis of both identity theft or fraud and tax fraud. The basic elements of the scheme involve an individual who seeks out to obtain the personally identifiable information (PII) of another person. PII information includes one’s name, address, Social Security number, individual tax identification number (ITIN) and other protected financial information. In some schemes, the ringleader may even pay others to commit identity theft.
After obtaining personal information belonging to another, the individual then completes a false tax return showing that the person is entitled to a tax return. The tax return is directed to an address under the control of the scheme. Upon receipt of the return, the individual cashes the check.
Unfortunately, this type of scheme creates major problems and complications for the individual whose identity was stolen. He or she will face significant difficultiesin proving his or her identity and correcting the fraudulent filing in his or her name. Since this scheme was centered in Los Angeles, Hacienda Heights, and Modesto,California, it is highly likely that many Los Angelinos will face significant difficulties in filing their taxes if they have not done so already.
Wesley Wade Hunter was incarcerated at the Pleasant Valley State Prison in Coalinga, California while charges in a 17-count federal indictment against him and others were pending. Hunter recently pleaded guilty to a single count of conspiracy to defraud the United States by obtaining the payment of false claims through tax refunds. The start date of the scheme is unknown, but it continued until May of 2012. Hunter admitted to working with co-conspirators to obtain the name, Social Security numbers, birth date, and other PII to fraudulently file tax returns. Typically, tax refunds were achieved through false claims for wage and withholding amounts under their own name while using the Social Security numbers of others. Prosecutors believe that the scheme resulted in an actual loss of more than $100,000 to the IRS and U.S. government.
Other individuals involved or allegedly involved in the SIRF scheme includeGuadalupe Flores of Los Angeles who pleaded guilty to the theft of public money,Latasha Coates of Los Angeles who pleaded guilty to conspiracy, Crystal Coleman of Los Angeles who also pleaded guilty to conspiracy, and Lisa Tavra of Las Vegas, Nevada who also pleaded guilty to conspiracy. Lourdes Brown of Modesto, California is accused of being involved in the SIRF conspiracy and has pleaded not guilty. He is scheduled to begin trial on July 12.
If you are facing serious tax problems or a tax audit due to an SIRF scheme, cleaning up the mess can require a working knowledge of reconstructive accounting and, if you are believed to be involved in the fraud, audit techniques. A botched handling of suspicion created by an SIRF scam can result in a lengthy and intensive audit and potential penalties not limited to fines and referral to IRS Criminal Investigations Division (IRS CID).
David Klasing is an experienced dually licensed tax attorney and CPA. He has more than 20 years of practice experience and previously worked as a public auditor. He can use this experience to correct issues created by the SIRF scheme. If an audit is launched, he can work to anticipate the areas of inquiry and prepare a responsive and strategic audit plan. To schedule a reduced-rate tax consultation at our Los Angeles or Irvine locations, call the Tax Law Offices of David W. Klasing at 800-681-1295 today or contact us online.