Tampa criminals find tax fraud schemes more profitable than drug dealing

You know it's a weird criminal economy when tax fraud brings in more money than drug dealing.

Or at least the 1040 schemes did until Tampa, Fla., law enforcement earlier this month launched a series of raids and arrested many of the tax crooks.

Tampa criminals apparently found it more lucrative, and safer, to shift from street corner drug sales to identity theft and online tax cons that delivered the ill-gotten gains to their mailboxes.

The financial loss from the new criminal careers is substantial, both to Uncle Sam and the victimized taxpayers whose personal information was used to file fake returns that produced false refunds.

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Postal Inspector Doug Smith told The Tampa Tribune and News Channel 8 that in a six-month period his agents seized an estimated $100 million in fraudulent tax refunds. Tampa Police Chief Jane Castor said that number represents less than 10 percent of the total fraud.

The final tax fraud tally in the Tampa area alone could approach $1 billion.

Investigative hurdles: A taxpayer safeguard turned out to be an enforcement obstacle for Tampa investigators.

Internal Revenue Service privacy restrictions prevent law enforcement from accessing tax returns. So even if someone is caught with fraudulent tax refund proceeds, investigators can't see the tax returns filed to obtain the money.

That means that none of the Tampa suspects were charged with tax fraud.

Instead they are facing charges of identity theft and money laundering.

Don't be a tax fraud victim: Investigators believe Tampa is the leading edge of a tax fraud/identity theft national trend that they are comparing to the 1980s' crack epidemic.

Sen. Bill Nelson (D-Fla.) is working on legislation to try to plug some of the holes in the system, as well as make it easier for local police to investigate tax fraud.

While lawmakers and law enforcement work on ways to catch tax fraud perpetrators, taxpayers can help themselves by being on guard.

If you are expecting a refund, either by snail mail or direct deposit, stay on top of that tax check's status. Regularly check the IRS onlline refund tracker Where's my refund?

If you're asked for personal, finanical or tax informaiton online, don't hand it over. It's probably a scam. 

Don't reply to e-mails or open any attachments. The phishing effort could infect your computer and get back-door access to your funds.

Instead, forward the questionable communication to the IRS at [email protected].

Do contact the IRS with your concerns.

And remember, any time a tax deal seems too good to be true, it probably is.

You also might find these items of interest:

• Lessons from $110,000 tax refund theft
• Aiding and abetting identity theft
• The real me