1040_tax refund fraudAs a private investigator and forensic accountant in the heartland of Indianapolis, Indiana it seems every day I hear about the “average Joe” getting their identity stolen; perhaps through a hacker who infiltrated a company’s server like JP Morgan Chase, Home Depot, Target, etc., through stolen credit card information from an e-commerce or online purchase, or through a “social engineering specialist” fraudster who steals personal information by cold calling you on the phone and using their powers of persuasion to collect your personally identifiable information (PII).  

Wikipedia defines PII as “information that can be used on its own or with other information to identify, contact, or locate a single person, or to identify an individual in context.”   NIST defines PII as “any information about an individual maintained by an agency, including

  1. any information that can be used to distinguish or trace an individual‘s identity, such as name, social security number, date and place of birth, mother‘s maiden name, or bio-metric records; and
  1. any other information that is linked or linkable to an individual, such as medical, educational, financial, and employment information.” So, for example, a user’s IP address as used in a communication exchange is classed as PII regardless of whether it may or may not on its own be able to uniquely identify a person.”

To sum it up PII is any personal bit of your information that could be used to identify you to another entity during the verification process. Why would someone want your PII?  One reason that is growing in popularity is for the fraudster to commit Tax Refund Fraud.  Tax Refund Fraud is when the fraudster files a self-generated, fictitious refund to either the IRS or State Revenue Agency using your PII.  When they file tax returns in your stead, they typically use counterfeit tax documentation like W-2s and K-1s.  They can also use stolen children’s social security numbers to increase the amount of refund on the tax return, meet the conditions for the Earned Income Credit, basically whatever they can to maximize their stolen tax refund.  All of this is usually conducted before you, the average Joe, have the chance to file your own taxes.  So instead of receiving your well-deserved tax refund, which you probably budgeted for, your tax return is denied, while you spend months clearing the fraudulent mix-up. In a future article, we will discuss basic steps that you can take in order to minimize the risk of your PII getting into the wrong hands.

Michael Hathaway, CFE, CAMS, P.I.
Director of Investigations
Certified Fraud & Forensic Investigations