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{This Wildcard Wednesday is a republish with permission by Paul Fanara, originally posted at the Official Blog of Aspire Technology Solutions}

From CNN: IRS Policies Help Fuel Tax Refund Fraud

“Using laptops and free Wi-Fi connections, criminals are stealing identities and using the names of legitimate taxpayers to file fraudulent online tax returns. They’ve raked in billions, buying luxury cars, expensive jewelry and plastic surgery, police said.

“It’s like the federal government is putting crack cocaine in candy machines,” said Detective Craig Catlin of the North Miami Beach, Florida, Police Department. “It’s that easy.”

First, thieves obtain Social Security numbers and other personal information from insiders at hospitals, doctor’s offices, car dealerships or anywhere the information is stored. Then, they file an online tax return using the real taxpayer’s name and a fictitious income. In most cases, the criminals buy a debit card so the IRS can issue the refund on that card, although some thieves have also gotten their returns on actual Treasury checks.

The thieves know that the IRS does not verify the employer W-2s sent with the return until after the refund is issued.”

So basically, the Federal Government has a huge hole in its technology system that can allow for petty criminals to defraud the government of thousands of dollars at a time.

Just like that.


"...I'm here to tell you how to manage your businesses, information and finances better; just like the government does!"

The hole doesn’t stem from improper implementation of technology alone; it is a policy issue that allows for the technology to be taken advantage of.    In other words, the folks in charge of regulating things such as banking mandates, HIPAA regulations, the SEC, the FAA and other complex technology driven systems that are supposed to protect your identity, your personal information and your money, have themselves created a system that with a simple identity theft can transfer thousands of your tax dollars to a criminal before the IRS even realizes that it’s happening.

This exposes a couple things.  Mainly, all of the relevant issues that fall beneath the category of, “the biggest security concern with any technology based system is the human factor.”  One – the bad guys are always a step ahead.  Two – the people that design these systems are arrogant enough in most cases to be shocked by these lapses in security and rarely see them coming.  Three – the users of these technology systems in general don’t care an assume everything will work and remain secured regardless of what they do.  Four – people on the whole are good natured, well meaning and very trusting of authority figures.

The other big issue this it exposes is some of the basic failures and falacies of many of our current “watch dog” programs.  If the watch dogs can’t secure their own dog house, how are they going to watch over yours?  And according to this article, even small-time thieves have been able to eat the dogs’ lunches right under their nose.

Businesses – and the government is a business – implement automated systems in order to improve services and reduce costs.   Who out there in America really thinks the IRS provides good services?  And if there is anyone that thinks the government is doing a good job at reducing costs, please say hello to the hookah smoking caterpillar for me the next time you talk to him.  Now seeing the security failures of their current system, how much money has been and is going to be lost by the current security issues?  How much is it going to cost to fix it?  And what is the impact on those that have had their identity stolen and have been issued a fraudulent refund check?

What a mess. 

But in the government’s usual money-grab approach, they short-sighted this and wrote bad policy to go along with technology solutions.  Unfortunately they think the policies they have written and expect other businesses to follow will secure YOUR information and make your lives better, but most likely it is just as ineffective and off the mark.

Good luck, America.  We’re going to need it.