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Authorities say Florida a hotbed for income tax fraud

Tax season is here, and for most people that means digging out the box full of last year’s records and receipts and starting the process of preparing and filing an income tax return.

For law enforcement officials in Florida, though, tax season brings its own unique concerns. This is because Florida leads the nation in identity theft-based tax return fraud. Over the past year, hundreds of Floridians have been arrested for using stolen information to file false tax returns in the hopes of getting a refund from the IRS or the Florida Department of Revenue.

In some cases, acts of fraud were committed by one or two people acting on their own. In others, the frauds were perpetuated by gangs, drug trafficking rings and other large-scale criminal enterprise. Either way, tax fraud is a serious crime that can bring several years in prison.

Why Florida?

No one knows exactly why Florida leads the nation in identity theft tax fraud. However, most experts speculate that it has a lot to do with the state’s demographics.

First, Florida is the fourth-largest state in the country by population. Thus, it stands to reason that there will be more cases of fraud than in smaller states.

Still, Florida’s tax fraud rate continues to be high, even when adjusted for population. This may be because Florida is home to so many people who have valid Social Security numbers but little to no earned income. Retirees, students and transient individuals all fall into this category. Not only are these individuals less likely to file their own income tax returns, but they are also more likely to qualify for potentially-lucrative refundable tax credits, such as the Earned Income Tax Credit.

In addition, because Florida is a haven for retirees, it is also home to a number of people who have recently died. The recently deceased are frequently targeted for identity theft tax fraud because they won’t file a duplicate tax return that might alert the IRS to the fraud.

IRS cracking down on tax fraud

Nationwide, the IRS reports that there were nearly 450,000 instances of identity theft-based tax fraud in 2012 alone. This represented a more than 80 percent increase from the previous year.

In response to this dramatic increase, the IRS is working with state authorities to track down and prosecute suspected perpetrators of identity theft and income tax fraud.

Both tax fraud and identity theft are serious felonies. As such, individuals charged with these crimes would be wise to seek the assistance of an experienced criminal defense attorney who can make sure their rights are protected.