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Arizona to crack down on tax fraud

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Armed with a new computer program, the Arizona Department of Revenue is cracking down on tax fraud this year.

And although administrators say illegal immigrants aren’t the target, they’re likely to be the majority of those caught up in the effort.

People whose federal tax-identification number doesn’t match the information provided on their W-2 form will not get their refund unless they can prove they are the ones who did the work.

One tax preparer told The Arizona Republic that the effort will hurt the Hispanic community.

“It’s money they earned through the sweat of their labor,” said Carlos Maldonado, a Phoenix resident who prepares tax forms for Spanish speakers. “The government is keeping money that doesn’t belong to it.”

The state and federal Internal Revenue Service encourage illegal immigrants to file income-tax forms and comply with tax laws, which apply to individuals who earn revenue in the United States regardless of their legal status.

In Arizona, where it’s a crime to knowingly hire an illegal immigrant, those immigrants will often work using either a fake Social Security number or one that belongs to someone else. Their employer puts that Social Security number on their W-2 form.

For tax filing, illegal immigrants — or anyone in the United States legally who isn’t eligible for a Social Security number — must apply to the IRS for an Individual Tax Identification Number. They then file taxes under that number.

The Arizona Department of Revenue’s new program will check all tax documents filed with tax ID numbers to make sure any listed Social Security number and the tax ID number both belong to the employee named. If they don’t, the state will send out a letter asking the employee to prove he or she is the one who actually did the work.

Anthony Forschino, assistant director at the Department of Revenue, said about 60,000 Arizona residents filed taxes last year using a tax ID number, resulting in about $6 million in refunds.

He said the state sampled a “pretty good portion” of those returns and found that in 80 to 85 percent of them, the ID number did not match information provided on an associated W-2.

This year, the new program will allow them to go through all the returns.

“We have a responsibility to try and stop fraudulent returns,” Forschino said. “There are people that, and we have found this in the past, who tried to create a W-2 that doesn’t even exist or stole somebody’s W-2 and tried to get a refund.”

Forschino said they want to give refunds to those who earned them, regardless of legal status. He said his department is still trying to work out the details of the crackdown, particularly what sort of documentation an individual could show to prove he or she is the one who did the work and paid the taxes.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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