One little number has fueled South Florida’s tax-fraud explosion- The Electronic Filing Identification Number, EFIN for short, is an obscure processing number issued by the IRS. For tax preparers, including CPA’s and numerous businesses, EFINs are essential for handling tax filings in the digital age. But in the wrong hands, these can amount to a computer pass for filing bogus returns in bulk.
In the last few years, records show the federal taxing agency has issued thousands of EFINs to purported electronic tax preparers throughout South Florida. Some of the highest concentrations are zip codes in North Miami, North Miami Beach and Miami Gardens, which authorities say have become hot spots for refund fraud. The number of EFINs in those mostly poor inner-city communities is similar to that in Miami’s traditional business districts, such as Brickell Avenue.
With the exception of convicted felons, the IRS allows practically anyone to obtain an electronic filing ID to file multiple refund claims in others’ names. Most recently, Josue Pierre exploited this special IRS tax-filing designation, using stolen IDs to file hundreds of fabricated online tax returns. The scam allowed the former North Miami resident to lease a luxury condo in downtown Miami’s Icon Brickell and drive around town in a Land Rover.
South Florida, already boasting the nation’s highest rate of identity theft, has now secured the title of being the country’s capital of tax-refund fraud — a crime that costs the IRS more than $5 billion a year in losses nationwide.
EFINs have poured gasoline on the tax fraud fire, according to federal investigators. They give scammers — armed with stolen ID info such as a Social Security number — the distinct advantage of filing refund claims without the need for personal identification numbers, or PINS. Moreover, EFIN preparers can also submit multiple claims without an electronic W-2 income tax form. Currently, the IRS does not have any specific tests or training for an individual to obtain an EFIN.
Making the scam even easier is the fact that EFIN allows criminals to order and obtain hundreds of prepaid debit cards, eliminating the need for bank accounts, transfers or checks. To mitigate the situation, IRS criminal investigators have worked closely with the FBI and U.S. Attorney’s Office to pinpoint suspicious operators in South Florida. By mid-2014, they had revoked a total of 117 EFINs used to file 166,000 phony refund claims, according to authorities.
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