We should be frustrated and disturbed by questions asked during a recent White House press conference. The issue was whether a deported woman was a threat:
Q I know you’re familiar with the case in Arizona of the mother, Guadalupe Garcia de Rayos. Is she a threat to this country?
MR. SPICER: I’m going to leave that up to ICE. We don’t get involved from the White House to particular cases. That’s not —
Q But she’s a symbol —
MR. SPICER: You’re right, and I understand.
Q But is she a threat to public safety, though?1
That depends on your definition of “safe.”
Public safety vs. removable threats
Someone can be a threat without endangering public safety. This deported Mexican national was one of many threats to a national identity system we depend on. We condemn the exploits of foreign hackers every day, but when it comes to identity fraud from illegal aliens we argue over the morality of punishment.
The media was aghast and politicians expressed outrage when Ms. de Rayos was removed. The exchange at the press conference confirms just how abnormal the rhetoric is. Are we OK with excusing identity fraud if the perpetrators are not a violent threat and only harm the security of our Social Security numbers? The reaction to de Rayos’ removal argues yes. In time, that answer will change for those who discover that someone else claimed their tax refund or took out credit cards in their name.
SSN theft, refund fraud: no safe haven for your identity
The Justice Department works hard to stop criminal impersonation and other kinds of identity theft. The agency details recent crackdowns on tax refund fraud. For example:
On January 20, 2017, Silvio Galvez, 30, of Miami, was arrested on a criminal complaint and is charged by indictment for his alleged involvement in a $50 million stolen identity refund fraud scheme involving the cashing of fraudulently obtained large-dollar tax refund checks.2
Refund fraud and SSN theft are old problems made worse by our ridiculously distorted views on fairness for immigrants. We tolerate illegal aliens working in the U.S., tell them they are essential because of the menial tasks they perform, guarantee them worker protections meant for citizens, and then complain when our identities are stolen.
It’s not as if government watchdogs don’t warn about risks from identity theft that range from fraud to terrorism. A GAO report going back to 2002 detailed an investigation at the Salt Lake City airport that led to 61 people being charged for misusing Social Security numbers:
In the May 2002 report, the SSA Inspector General noted that identity theft begins, in most cases, with the misuse of a SSN.3
That was fifteen years ago. We still don’t hear the message.
IRS attacks refund fraud. We pay the bill.
The IRS estimates that refund fraud from identity theft would have cost $14.59 billion in 2015 had the agency not halted $12.35 billion in phony payouts. $2.24 billion slipped through our fingers.4
In 2017 the Treasury Inspector General for Tax Administration warned:
However, the false reporting of wages and withholding continues to account for the largest amount ($1.3 billion) of undetected potentially fraudulent tax return refunds. With the passage of legislation to accelerate the reporting of Forms W-2, the IRS should be able to significantly reduce the number of these undetected returns.5
That’s good news. Give the government credit for making an effort, but it also gives illegals a mechanism to work illegally with a taxpayer ID number:
Resident aliens who apply for, or have applied for and received, an ITIN may be undocumented workers who are not legally employed in the United States. The Tax Code does not distinguish between legitimate and illegitimate employment. All income derived from all sources whatsoever, unless otherwise exempted, is reportable and taxable. This includes the earnings of undocumented workers regardless of potential violations of labor or immigration law.6
Does this make sense? Offering ITINs sends the wrong message. Luckily for those who don’t want to confront officialdom there is no shortage of identity factories and fraudulent SSNs.
Flawed values: a cause that hurts us
We are warned about refund fraud and identity theft. We hear about the tax gap and how much revenue is not collected. Every so often there is a showy prosecution of someone with too much money who cheated us out of a boatload of cash. Meanwhile, illegal immigrants keep working. Identity mills crank out their fake documents. Refund, employment, and other types of fraud persist. Government officials who want to crack down on the problem are criticized for being racist and xenophobic.
The argument that people who commit these crimes are not threats to public safety and deserve leniency should offend every taxpayer. During the press conference mentioned at the beginning of this post Sean Spicer said what we already know. Too many believe that the law shouldn’t apply to illegal immigrants:
If this was any other subject, if this was tax evasion and we said, well, they only really violated a little bit of — they only cheated on their taxes a little, you wouldn’t be saying hey, should they really be going to be prison or should they be getting a fine?7
That’s a good reason to worry and to wonder: how many versions of you are out there?
UPDATE April 9, 2017: had enough fraud yet?
If there is any doubt in your mind how outrageous the combined identity theft and refund fraud problem is, a new indictment from Missouri might change your thinking:
According to the indictment, Williams and others stole public school employees’ IDs from a payroll company and used them to electronically file more than 2000 fraudulent federal income tax returns seeking more than $12 million in refunds. He also allegedly stole several Electronic Filing Identification Numbers (EFINs) that he used to secure bank products allowing him to print refund checks and direct the Internal Revenue Service (IRS) to send refunds to prepaid debit cards.8
The kicker is that this man was deported in 1995. He came back to the U.S. The indictment also charges that he voted in the last two presidential elections.9
UPDATE May 5, 2018: refund fraud and tax reform
Small business profits from refund fraud, too
Tax season is over for 2018 and we just received some good news from the Department of Justice that another refund scammer is being locked up. A woman from Louisiana:
operated as a tax return preparer using several different business names. From 2008 to 2016, Washington conspired with others to prepare false tax returns using stolen identities. Members of the conspiracy stole the names and Social Security numbers of individuals who had been arrested or imprisoned, and then used that information to file fraudulent tax returns.10
While the DOJ fights to keep your money in your own bank account, the Treasury Inspector General for Tax Administration handed taxpayers some sobering numbers on Tax Day 2018. It’s painful to thank the IRS, but it’s amazing the agency catches anyone considering what it has on its plate: $3.4 trillion in taxes to collect, 246 million returns to process, $437 billion in refunds to send out, and 81,000 workers who try to get it right.12
Despite all this, the IRS stopped $8.2 billion in fraud using prisoner SSNs.13 By March 1, 2018 the agency had halted $7.3 million in fraudulent refunds.14
Bad IRS credits still sap billions
Improper IRS payments still sap billions in tax revenue. Inspector General testimony on Tax Day revealed that $24.9 billion in bad payments were sent out in 2017 including $7.4 billion15 thanks to the illegal immigrant-friendly Additional Child Tax Credit.
Despite the billions lost to fraud, we still heard a call late last year to dole out even more in Child Tax Credits. Linda Sanchez (D-CA) slammed tax reform and demanded more money for working families:
The amendment by Rep. Sánchez would expand the Child Tax Credit to provide a $3,600 credit for families with young children, index the credit for inflation, eliminate the $3,000 earnings threshold for the refundable portion of the credit, and make permanent the $300 “family flexibility” credit.16
Republicans beat Sanchez to the punch.
Republican tax reform raised the Child Tax Credit from $1,000 to $2,000 per child. Even better, it strengthened refund fraud protection by requiring applicants to have a valid SSN. As Republican Congressmen Luke Messer (R-IN) and Drew Ferguson (R-GA) point out, a 20-year old loophole from the Clinton-era 1997 Taxpayer Relief Act allowed an individual to claim the credit with only an ITIN number, which is issued regardless of immigration status. With tax reform that changed and only valid SSNs are accepted.
This is great news for taxpayers and bad news for people who game the system.
Here’s some more good news: our national unemployment rate is 3.9%. That should make those additional children a lot more affordable unless, of course, you aren’t eligible to be working.
UPDATE August 4, 2018: Double Trouble from Agency Democrats hate
While Democrats vent their anger about alleged ICE cruelty towards illegal immigrants the agency is busy making sure that your secure identity stays that way.
On July 23, 2018 the Justice Department announced another 25 arrests for document and benefit fraud and Social Security number theft as a result of Operation Double Trouble. The ICE bust included 21 people in the U.S. illegally:
In total, those arrested and charged are alleged to have defrauded the American taxpayer of more than a quarter of a million dollars, including $200,000 in health care.18
Before that it was a citizen from the Dominican Republican aiding and abetting illegals in the U.S.:
According to Rodriguez-Canario, his conspirators sold social security cards and corresponding Puerto Rican birth certificates to individuals illegally residing on the mainland United States for prices ranging from $500 to $1,300 per set.19
The news releases keep coming while congressional Democrats bang the drum for illegal residents and demand that ICE be abolished.
Keep that in mind next time you check your credit report and can’t figure out where that new charge account you didn’t open came from.
PIN program legislation a good idea that won’t work
Shortly before the Double Trouble announcement Maine’s Republican Senator Susan Collins joined with Alabama Democrat Doug Jones to introduce the Taxpayer Identity Protection Act. The bill is a well-intentioned effort to expand the IRS’ IP PIN program to help secure taxpayer data:
While taxpayers would not be required to use an IP PIN, Senators Collins and Jones’ legislation would allow them to opt-in to the program if they desire an extra layer of identity protection. The five-year incremental expansion would provide accountability that the IRS is adequately building out the IP PIN program, while at the same time ensuring taxpayers have access to the extra layer of security as soon as possible.20
There hasn’t been much fanfare for the bill. Sen. Jones was the only cosponsor. H.R. 4089, the House version, had no cosponsors.
The problem with this kind of legislation is that human nature is likely to take over. Taxpayers who haven’t been hit with identity theft will trust the government to protect their sacred SSNs. Making the PINs optional means many, if not most people are not going to use them. A lot can happen during the five-year phase in if the government decides to make the PINs mandatory, especially if Republicans lose out in Congress and liberal immigration policies including eliminating ICE replace the rule of law.
UPDATE September 23, 2018: new tax fraud reports keep coming in
The DOJ’s “Stolen Identity Refund Fraud Press Releases” page keeps getting longer. Of note is a September 19, 2018 press release that reports a man from Honduras who hatched an identity theft and refund fraud plot:
In total, the scheme involved approximately 200 false tax returns and resulted in an intended tax loss of over $1.1 million.21
That’s a lot of damage for one person, but on the brighter side the IRS reports that taxpayer identity theft has dropped significantly since 677,000 reports were received in 2015.22
Thieves are clever and they keep coming up with new ways to cheat us out of our money. Hurricane Florence was a disaster for many, but for some it was also a way to get into our wallets. The agency reports that phony charities, fake websites, and individuals impersonating IRS personnel “to help victims file casualty loss claims and get tax refunds”23 sprung up in the wake of the disaster.
For midterm candidates looking for that elusive red herring, how about wrapping your arms around this one? Penalties should be severe for those who profit from disaster. As far as the Honduran tax thief is concerned, he was sentenced to prison and three years of supervised relief. Why? Just kick him out.
UPDATE January 21, 2019: shutdown won’t stop tax refund and SSN theft
Nothing has changed for taxpayers despite the fact that the IRS furlough shut down most agency activities a month ago. The filing season starts January 28, 2019. The IRS wants you to remember that the shutdown won’t change your risk of identity theft and refund fraud:
Refunds will be paid, but the IRS cautions that returns will continue to be subject to refund fraud, identity theft and other internal reviews as in prior years.24
The agency also confirmed that it will “provide refunds to taxpayers as scheduled.”25
The same day the agency’s announcement was issued Democrats Tim Kaine and Mark Warner issued their own statement about the impact of the shutdown on refunds:
While the contingency plan includes some flexibility in determining how the Department can respond to a lapse in government funding that continues beyond five business days, the issue of tax refunds is considered a ‘non-excepted activity,’ meaning that the funding lapse has led the IRS to stop issuing tax refunds in addition to other needed taxpayer services,” wrote the Senators.26
How this plays out remains to be seen. It’s very difficult to separate partisan fear mongering from the truth. What we do know for certain is that tax refund and SSN fraud will continue unabated as the new filing season presents more opportunities to steal money from taxpayers and the government.
Ironically the current shutdown is all about illegal immigration, a big problem that puts your Social Security Number at risk.
Last week the Social Security Administration issued a warning about another SSN theft scam:
In some cases, the caller states that Social Security does not have all of your personal information, such as your Social Security number (SSN), on file. Other callers claim Social Security needs additional information so the agency can increase your benefit payment, or that Social Security will terminate your benefits if they do not confirm your information. This appears to be a widespread issue, as reports have come from people across the country.27
Where do these calls come from? The article didn’t say, but rest assured U.S. currency is good just about anywhere on earth.
UPDATE May 20, 2019: the identity theft you never heard of
Even if we find a way to halt the abuse of Social Security numbers or discard their use entirely in favor of something more secure, there will always be a new angle on identity theft.
On May 13, 2019 ICE announced the indictment of 96 individuals for marriage fraud:
This investigation targeted a suspected criminal organization allegedly operating a large-scale marriage fraud scheme to create sham marriages to illegally obtain admission and immigrant status for aliens in the United States.28
According to ICE’s press release, U.S. permanent resident status was for sale for $50,000-$70,000 and included fraudulent wedding albums.29
That’s an expensive phony marriage. According to a June 2018 indictment fake marriages for illegals in Connecticut were for sale for as little as $5,000-$20,000.30 That sounds like a pretty good deal, considering the benefits of LPN status.
The GAO warned us about marriage fraud over thirty years ago in the agency’s report “Controls in Most Countries Surveyed Stronger Than in U.S.”31 It also warned us about “Identity Fraud: Prevalence and Links to Alien Illegal Activities” in June 25, 200232. We can battle identity theft and immigration fraud with every tax dollar at our disposal, but the benefits of U.S. residence will always outweigh the risks of getting caught. The numbers are in favor of the illegal and that means identity theft will get worse as we refuse to deal with the real problem of unchecked illegal immigration.
1. “Press Briefing by Press Secretary Sean Spicer, 2/21/2017, #13.” The White House. February 21, 2017. https://www.whitehouse.gov/the-press-office/2017/02/21/press-briefing-press-secretary-sean-spicer-2212017-13, retrieved March 14, 2017.
2. “Over 100 Defendants Charged in Government Impersonation, Fraud, and Theft Schemes Involving Tens of Thousands of Stolen Personal Identities.” The United States Attorney’s Office. Southern District of Florida. January 31, 2017. https://www.justice.gov/usao-sdfl/pr/over-100-defendants-charged-government-impersonation-fraud-and-theft-schemes-involving, retrieved March 21, 2017.
3. “Identity Fraud. Prevalence and Links to Alien Illegal Activities.” United States General Accounting Office. June 25, 2002. p. 12.
4. “2016 Filing Season. IRS Improved Telephone Service but Needs to Better Assist Identity Theft Victims and Prevent Release of Fraudulent Refunds.” United States Government Accountability Office. March 8, 2017. pp. 1-2
5. “Efforts Continue to Result in Improved Identification of Fraudulent Tax Returns Involving Identity Theft; However Accuracy of Measures Needs Improvement.” Treasury Inspector General for Tax Administration. February 9, 2017. https://www.treasury.gov/tigta/press/press_tigta-2017-01.htm, retrieved March 14, 2017.
6. “Efforts Are Resulting in the Improved Identification of Fraudulent Tax Returns Involving Identity Theft.” Treasury Inspector General for Tax Administration. April 24, 2015. https://www.treasury.gov/tigta/auditreports/2015reports/201540026fr.html, retrieved March 14, 2017.
7. “Press Briefing by Press Secretary Sean Spicer, 2/21/2017, #13.” Op. cit.
8. “Missouri Man Indicted for $12 Million Tax Refund Fraud, Voter Fraud, Illegal Reentry and Felon in Possession of Firearm.” The United States Department of Justice. March 29, 2017. https://www.justice.gov/opa/pr/missouri-man-indicted-12-million-tax-refund-fraud-voter-fraud-illegal-reentry-and-felon, retrieved April 9, 2017.
10. “Louisiana Tax Return Preparer Sentenced to Jail for Stolen Identity Tax Refund Fraud.” Department of Justice. Office of Public Affairs. May 2, 2018. https://www.justice.gov/opa/pr/louisiana-tax-return-preparer-sentenced-jail-stolen-identity-tax-refund-fraud, retrieved May 4, 2018.
12. “Continued Oversight of the Internal Revenue Service.” Testimony of The Honorable J. Russell George, Treasury Inspector General for Tax Administration. Joint Hearing Before the Committee on Oversight and Government Reform, Subcommittee on Health Care, Benefits and Administrative Rules and Subcommittee on Government Operations U.S. House of Representatives. April 17, 2018. p. 1. https://www.treasury.gov/tigta/congress/congress_04172018.pdf, retrieved May 4, 2018.
13. Ibid., p. 11.
14. Ibid., p. 9.
16. “Linda Sanchez Introduces Amendment to Restore and Expand Child Tax Credit.” Linda Sanchez. November 7, 2017. https://lindasanchez.house.gov/media-center/press-releases/linda-s-nchez-introduces-amendment-restore-and-expand-child-tax-credit, retrieved May 5, 2018.
17. “Rep. Messer Pushes to Eliminate Tax Credits for Illegal Immigrants.” Luke Messer. October 4, 2017. https://messer.house.gov/news/documentsingle.aspx?DocumentID=647, retrieved May 5, 2018.
18. “ICE HSI Boston, Attorney General announce 25 arrests in large-scale document and benefit fraud scheme.” U.S. Immigration and Customs Enforcement. July 23, 2018. https://www.ice.gov/news/releases/ice-hsi-boston-attorney-general-announce-25-arrests-large-scale-document-and-benefit, retrieved August 4, 2018.
19. “Dominican national pleads guilty to role in national conspiracy to sell US identity documents to illegal aliens.” U.S. Immigration and Customs Enforcement. February 20, 2018. https://www.ice.gov/news/releases/dominican-national-pleads-guilty-role-national-conspiracy-sell-us-identity-documents, retrieved August 4, 2018.
20. “Senators Collins, Jones Introduce Bill to Prevent American Taxpayers and Seniors from Falling Victim to Identity Theft.” Susan Collins. July 13, 2018. https://www.collins.senate.gov/newsroom/senators-collins-jones-introduce-bill-prevent-american-taxpayers-and-seniors-falling-victim, retrieved August 4, 2018.
21. “Foreign National Sentenced to Prison for His Role in Stolen Identity Refund Fraud Scheme.” The United States Department of Justice. September 19, 2018. https://www.justice.gov/opa/pr/foreign-national-sentenced-prison-his-role-stolen-identity-refund-fraud-scheme, retrieved September 23, 2018.
22. “Despite Major Progress, Identity Theft Still on IRS ‘Dirty Dozen’ Tax Scams List.” IRS. March 7, 2018. https://www.irs.gov/newsroom/despite-major-progress-identity-theft-still-on-irs-dirty-dozen-tax-scams-list, retrieved September 23, 2018.
23. “IRS warns of scams related to natural disasters.” IRS. September 18, 2018. https://www.irs.gov/newsroom/irs-warns-of-scams-related-to-natural-disasters, retrieved September 23, 2018.
24. “IRS Operations During the Appropriations Lapse.” IRS. https://www.irs.gov/newsroom/irs-operations-during-the-appropriations-lapse, retrieved January 21, 2019.
26. “Warner, Kane Press Trump Administration on How Government Shutdown Will Impact Tax Refunds for Virginians.” Tim Kaine. January 7, 2019. https://www.kaine.senate.gov/press-releases/warner-kaine-press-trump-administration-on-how-government-shutdown-will-impact-tax-refunds-for-virginians, retrieved January 21, 2019.
27. Borland, Jim. “Beware of Scammers Pretending to be Social Security.” SSA.gov. January 17, 2019. https://blog.ssa.gov/beware-of-scammers-pretending-to-be-social-security/, retrieved January 21, 2019.
28. “Nearly 100 people indicted, 50 currently in custody in massive Houston-based marriage fraud conspiracy.” U.S. Immigration and Customs Enforcement. May 13, 2019. https://www.ice.gov/news/releases/nearly-100-people-indicted-50-currently-custody-massive-houston-based-marriage-fraud, retrieved May 20, 2019.
30. “Two Connecticut Residents Charged with Operating Extensive Immigration Marriage Fraud Scheme.” United States Department of Justice. June 22, 2018. https://www.justice.gov/usao-ct/pr/two-connecticut-residents-charged-operating-extensive-immigration-marriage-fraud-scheme, retrieved May 20, 2019.
31. “Marriage Fraud: Controls in Most Countries Surveyed Stronger Than in U.S.” United States General Accounting Office. July 1986. https://www.gao.gov/assets/80/75683.pdf, retrieved May 20, 2019.
32. “IDENTITY FRAUD: Prevalence and Links to Alien Illegal Activities.” U.S. Government Accountability Office. June 25, 2002. https://www.gao.gov/products/GAO-02-830T, retrieved May 20, 2019.
Photos: “TOP STORY: ICE HIS investigation uncovers Florida document fraud operation.” U.S. Immigration and Customs Enforcement. July 21, 2011. https://www.ice.gov/news/releases/top-story-ice-hsi-investigation-uncovers-florida-document-fraud-operation, retrieved March 21, 2017.