Collaborative effort seeks to curb tax fraud

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  • | 12:00 p.m. February 14, 2007
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by Anthony DeMatteo

Staff Writer

Tax preparers throughout Jacksonville might have a little more to do this tax season.

The United States Secret Service, the Jacksonville Sheriff’s Office and State Attorney Harry Shorstein announced the start of a county-wide effort to prevent tax-return fraud by enlisting tax preparers to verify information on W-2 forms.

According to Kevin Frein, a special prosecutor assigned to the operation with the state attorney’s office, the filing of fraudulent W-2 forms cost the U.S. Treasury about $1 billion last year.

The secret service is offering a $50 reward to any tax preparer whose information leads to a tax fraud arrest.

“To coincide with that, we will send out a mass mailing to all the tax preparers who are listed in the Yellow Pages,” said Cary Rosoff, special agent in charge with the Jacksonville field office of the U.S. Secret Service. “What we’re asking of the tax preparer is just to make a phone call checking information in the Yellow Pages and verify with that employer that this person has, in fact, worked there before the tax return is ever filed.”

Sgt. Charlie Byrd of the Jacksonville Sheriff’s office said local authorities have made five arrests for the crime this year.

Frein said fraudulent W-2s are produced with commercial software and sold with valid employee identification numbers to those filing returns.

One of the factors in allowing the fraud, Frein said, is the popularity of rapid refunds. Banks, acting as intermediaries, issue refunds to taxpayers and are typically refunded by the Internal Revenue Service before a crime is detected.

“That’s a policy issue, why the system is set up so these rapid refunds occur so quickly without the accuracy being checked,” said Frein.

Frein said tax preparers contacted thus far have expressed willingness to cooperate with the initiative. He said defrauding a financial institution is a second degree felony punishable by up to 15 years in prison. Last year, all those charged with the crime were prosecuted on the state level.

Frein said that to his knowledge, the county’s program is the first of its kind in the country.

“I believe we are the jurisdiction doing things that are innovative and things that other jurisdictions can model to help combat crimes of the 21st Century,” he said.

After the press conference, Frein said those preparing tax returns are best able to prevent the crime in part because of the ready access the public has to W-2 forms mailed by employers.

“We long ago traded security for convenience,” he said. “You put somebody’s W-2 in an envelope and, let’s face it, how many people have access to that information?”



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