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ADOR Continues to Fight Evolving Tax Fraud Schemes

January 5, 2021
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Three Tax Return Schemes

Identity thieves are always looking for new ways to scam or steal taxpayers’ identities, including phishing schemes, card-skimming devices, unsecure Wi-Fi networks, data breaches, computer viruses, unsafe smartphone apps, and hacking email accounts.

The Arizona Department of Revenue (ADOR) treats detecting and stopping fraud with paramount importance. ADOR continues to fight and shut down fraudulent tax preparers and tax fraud through enhanced staff training and by adopting new countermeasures like advanced analytics with machine learning and artificial intelligence.

The following three schemes are a few examples ADOR has found that attempted to steal from Arizona taxpayers:

Watson Scheme:  ADOR identified this scheme when multiple returns were received with the same last name of "Watson."  This scheme evolved over the tax year, but all of the returns used stolen identities. In many cases, the identities were verified to individuals who lived outside of Arizona. ADOR received over 1,900 returns requesting over $500,000 in fraudulent refunds.

Tucson College Scheme: Criminals electronically submitted returns with W-2s from Tucson College. ADOR received a total of 14 returns requesting over $21,000 in fraudulent refunds. All returns were requesting similar refund amounts to prepaid debit cards.

1099-R Scheme: Fraudsters sent over 480 electronic returns requesting over $1,200,000 in fraudulent refunds. All of the returns, which included a fictitious 1099-R, used stolen identities.

Tips to help prevent being the victim of identity theft:

  • Do not carry identification with your Social Security Number (SSN) on it.
  • If someone asks for an SSN, always ask why because it is not always required.
  • Keep personal and confidential information in a secure place.
  • Secure your devices using anti-virus software.
  • Monitor your bill cycles and examine unfamiliar debit and credit card charges.
  • Use strong passwords and never share your passwords.
  • Never give personal information through unencrypted email, social media, or text messaging. Unless you initiated the call, never provide personal information over the phone.


Arizonans can also contact the Department of Revenue’s Identity Theft Call Center at (602) 716-6300, toll-free: 800-352-4090, or https://azdor.gov/individual-income-tax-information/identity-theft.

 

 

Tuesday, January 5, 2021