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How an IRS Agent Stole $1M From Taxpayers (onthewire.io)
Trailrunner7 writes: Few, if any, companies or government agencies store more sensitive personal information than the IRS, and consumers have virtually no insight into how that data is used and secured. But, as the results of a recent Justice Department investigation show, when you start poking around in those dark corners, you sometimes find very ugly things.
Beginning in 2008, a small group of people–including an IRS employee who worked in the Taxpayer Advocate Service section–worked a simple and effective scam that involved fake tax returns, phony refunds, dozens of pre-loaded debit cards, and a web of lies. The scheme relied upon one key ingredient for its success: access to taxpayers' personal information. And it brought the alleged perpetrators more than $1 million.
What sets this case apart is that the accused IRS employee, Nakeisha Hall, was tasked specifically with helping people who had been affected by some kind of tax-related identity theft or fraud.
Beginning in 2008, a small group of people–including an IRS employee who worked in the Taxpayer Advocate Service section–worked a simple and effective scam that involved fake tax returns, phony refunds, dozens of pre-loaded debit cards, and a web of lies. The scheme relied upon one key ingredient for its success: access to taxpayers' personal information. And it brought the alleged perpetrators more than $1 million.
What sets this case apart is that the accused IRS employee, Nakeisha Hall, was tasked specifically with helping people who had been affected by some kind of tax-related identity theft or fraud.
If you could get us a Finland or Netherlands style government I might change my mind, but after half a life time of watching our jokers at work, no way!
love is just extroverted narcissism
The whole security by obscurity thing happens way more than people think. Why do you think e-file refund scams work in the first place? Because (most likely) when the core system was designed, it was assumed that an IRS employee was entering the paper returns received in the mail by hand into an IRS-controlled computer. Therefore, the system only does a cursory SSN-to-name match as a sanity check before issuing a refund for whatever amount the return shows (as long as the math checks out.) The IRS is processing millions of returns a year, so this is only noticed when a taxpayer tries to file their return and is told they've already done so; it happened to a relative of mine a couple years ago.
Not knowing the architecture, e-file really feels like a security by obscurity mess. Perhaps the IRS gives "trusted e-file providers" encryption keys for an Internet-accessible gateway, and the tax software just pumps the raw data directly into the main filing system from the end user. Also, once it gets inside the IRS, the data is probably considered "trusted" and not encrypted as it's passed around from system to system. People love to hate the IRS, and I'm sure that's reflected in budget appropriations, so whatever system is in place is probably never upgraded beyond skeleton crew maintenance stuff and new regulations coding.
This is going to be the interesting part of the Internet of Things push -- take existing systems and slap them onto the Internet, no matter what it takes. I'm seeing this a lot in the private sector as well -- cloud cloud cloud! Get our previously inaccessible, vulnerable product out on the Internet before the competition does! IoT!! We're Agile, we'll fix all the problems as we go! Social! Apps! Etc...
In this case, it's interesting psychology. The article even states it - people assume that their data is safe once it makes it inside the IRS. Same way people assume their banking or health data are safe, then find out it's not as protected as they think.
Run of the mill embezzlement by someone placed in just the right spot to get away with it. But you know what? It's nothing compared to the Lois Lerner mess. This thief took advantage of IRS access to steal some cash. Lerner et al took advantage of IRS control to influence public discourse and a looming election.
The tax code is incomprehensibly complex and burdensome. That's trouble all by itself. But because it plays out in the sprawling, no-accountability federal big government landscape, it provides fertile ground for everything from thievery (a la the linked-to story) to partisan shenanigans (a la Lerner-related issues).
The drive to make government always bigger, always more complex, and always more insulated from consequence - that costs each of us real, serious money that produces nothing. We do need a tax enforcement agency. But we don't need it to be responsible for such mind-bogglingly byzantine complexity that it can't even keep an eye on its own people's ongoing criminal enterprises and partisan betrayals of trust.
Don't disappoint your bird dog. Go to the range.
I'd bet the majority of criminals who get caught thought the very same thing before they got caught.
The IRS didn't audit a single millionaire last year.
They didn't audit a single millionaire because they audited tens of thousands of millionaires. Unless of course you are referring to marital status. Unfortunately I can't find out whether they audited a single millionaire or if they were all married.
Just about everyone is guilty of some crime, including some very odd felonies. You're mostly not in jail because even the cops and the balance of the legal system realize what sort of bullshit most of them are and don't enforce them.
Nevertheless, with sufficient inducement, those laws can be used on you by those who are literally minded or corrupt enough. And because they are legitimate laws, your only recourse is either unconstitutionality or pure public backlash. The second being the reason that free speech and the right to protest and even to look threatening is a necessary check on governments who are quite capable of passing masses of laws that fail to reflect fairness or reality.
The difference is that government swindling occurs when there are corrupt individuals. Private enterprises intentionally swindle customers by design, AND has corrupt individuals. Ergo, private enterprise ftw!
None needed. The Government is MUCH more trustworthy than private enterprise, you NEVER have to worry about it...
Seriously, 1 million USD stolen by a few employees... That's not so bad. Considering the complexity of such a scam (ie. number of people involved), and the amount of money stolen I would say this is a minor case.
Just saying there are bigger cases of fraud in both the private and public sector... So this isn't a good case for arguing government is bad.
From the summary it seems multiple employees was involved, at which state YES fraud can happen. But the risk is small if multiple trusted employees need be involved.