Identity thieves seem to like to target the government. With April 15th nearing, the news is awash with fraudsters using other people's identities to claim an earned income tax credit worth thousands of dollars. Of course, we should feel sorry for the poor people who had their identity stolen and used to file a bogus return. After all, they will have to deal with the IRS, and prove they didn't file the bogus return.
The saddest thing is that they will probably find out about it when they file a legitimate tax return and it is denied. When this happens, they might have to prove, that they were not the person responsible for filing the faux (fake) return. In most instances, proving this will be hours of work and cost a little money.
In all fairness, it is evident that the IRS is taking tax fraud much more seriously than in the past. Because of this we are probably seeing more of it being reported. The IRS has an excellent information web page to assist the people being victimized. Please note that anyone paying taxes is a victim of all this, as the money being lost adds to the ever growing deficit.
Another aspect of this fraud is that if the government can prove the refund was not negotitated for the right person, they can hold the financial institution paying out the money liable. Frequently when the fraudulent refund is received a counterfeit ID is produced to negotiate the instrument. In these cases, when the true person proves they did not file the bogus return, the loss is going to be charged right back to the financial institution that paid out the actual cash in the scheme.
Another good example of a government program being targeted is the recent disclosure that hackers compromised a State of Utah Medicaid database. Given the quality of information stolen (medical), it is a prime opportunity for tax fraud (or medical fraud) against the government.