Schemes to defraud the taxman likely sprang to life the second the first penny was collected. But who could have imagined that billions would be paid out every year to those brazen enough to ask the government for refunds they didn’t deserve?
Last year, the IRS mailed out fraudulent refunds worth $3.6 billion. That was at least an improvement over the $5.2 billion doled out in 2012.
Still, it’s hard to fathom how a system could miss the half-million dollars to an address in Bulgaria that was used on 700 income tax returns.
For its part, the IRS said it spotted more than 12 million suspicious returns seeking a total of $40 million. So maybe the batting average isn’t so bad.
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Looking at a list of the top tax fraud cases for 2013, it’s not surprising to see that identity theft is a part of many of them. That crime topped the IRS’ 2013 list of top tax scams.
Of course, identity theft isn’t the only way fraudsters try to outfox the government. Last year, even a former big-city mayor was nailed for simply failing to pay all of his taxes.
Check out our Top 9 Tax Scams of 2013 Countdown:
9. Kwame Kilpatrick: $195,500 owed in back taxes
The amount owed by former Detroit Mayor Kwame Kilpatrick is a drop in the bucket when compared to the Motor City’s budget deficit, but it’s another reminder of how far the city’s fortunes have fallen. Kilpatrick, who was ordered to repay $4.5 million after his conviction on corruption charges centered on acts while he was in office, owed the city another $854,000 because of a conviction on state charges. Oh, and there’s the 28-year prison term he faces. Ironically, because he was mayor when the offenses occurred, taxpayers paid more than $800,000 to Kilpatrick’s lawyers to defend him.
8. Miles Julison: $400,000 sought from IRS
The self-described “bond servant of Jesus Christ” tried the patience of a judge for his claim that the U.S. District Court in Portland, Ore., had no jurisdiction over him. A jury disagreed, finding he had falsely claimed he was owed a tax refund of more than $400,000. The claim after he had filed a tax return stating he had made more than half million in “other income” and that the entire amount had been withheld. Somehow, despite the fact that the claim was false, the IRS mailed him a check. Julison even held a seminar at a local motel explaining to others how they could file false tax forms. None of his schemes involved bonds. No explanation has been forthcoming about his stated connection to Jesus.
7. California Tax Prep Company Employees: $1.35 million falsely claimed
Most of the big cases involving stolen identities used to file fake tax returns involved individuals, but what makes eight workers at two California tax preparation offices stand out is that they were professionals. The employees, who worked for either Total Tax Preparations Inc. or Nancy L. Olson & Associates, ran their scam from 2008 to 2012, according to the government.