The new tax scam

Seven On Your Side
April 10, 2009 2:52:13 PM PDT
The tax deadline is just days away and many people will be rushing to complete their returns. But imagine you filed your taxes and the IRS told you someone else had already done it. And gotten your refund without you ever knowing it. That happened to 2 area men after theives found out some vulnerabilities in one tax service's system.Michael Schaaff and Andrew Rak have never met but they have something in common. Both told 7 On Your Side's Tappy Phillips, they've never seen the inside of an H&R Block.

"I had never been to any H&R Block. Never," said Andrew Rak.

Yet both these men were notified that they had to repay thousands of dollars in refund anticipation loans for tax returns filed at H&R Block branches. And now, "$1,997, they want me to pay back." That's the amount Schaaff says was taken out in a fraudulent refund anticipation loan.

Here's how the scam worked. At two H&R Block offices in Queens, thieves used dummy W-2s and presented phony driver's licenses and then filed tax returns in the two men's names.

In Andrew Rak's case, the thief presented a Connecticut driver's license. Rak says he's never had a license in that state. The scammer also used his daughter's social security number, incorrect employer info and income amounts.

In Schaaff's case, the thief used a wrong date of birth and even misspelled his hometown.

But all this incorrect info didn't stop the thieves from filing returns and walking out of the H&R Block offices with debit cards. 2 days later the cards were credited with thousands of dollars in refund anticipation loans. Fortunately, (in Rak's case) the IRS did catch the discrepancies and refused to send the refund. But by that time the money was gone, and the bank came after the only names they had for repayment.

"It's insane, it's insane," says frustrated taxpayer, Michael Schaaff.

We went to both H&R Block offices where the phony returns were filed, they referred us to their corporate office. H&R Block said it requires "one form of photo ID" to file a tax return. And it checks the social security number against a "data base of fraudulent numbers." But they maintain there is "no way a tax professional would know" that both documents were phony.

Both men have filed police reports, but think if H&R Block had been more vigilant this would never have happened.

"They're making money at the expense of people's privacy like my own and that's what got me angry," says Rak.

"This could have definitely been avoided," laments Michael Schaaff. "The (red) flags were there. Everything was in place. But yet they still went and did it.

Story by: Tappy Phillips

Produced by: Steve Livingstone

STORY BY: Eyewitness News reporter Tappy Phillips