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Arizona cracks down on tax fraud

Refund withheld if tax ID, W-2 information don't match

by Alia Beard Rau, Bob Ortega and Ginger Rough - Apr. 9, 2011 12:00 AM

The Arizona Republic

The Arizona Department of Revenue is cracking down on tax fraud this year, thanks to a new computer program. Although administrators say illegal immigrants aren't the target, they are likely to be the majority of those caught up in the effort. [Tax fraud? No way! These are law abiding tax paying citizens, who's paper work doesn't match up and the thieves at the Arizona IRS are using that as an excuse to steal their money!]

People whose federal tax-identification number does not 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 said 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, could not say how much money the crackdown might save the state.

He said that last year about 60,000 Arizona residents filed taxes using a tax ID number, resulting in about $6 million in refunds. The state sampled a "pretty good portion" of those returns, he said, 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, he said, the new program will allow them to go through all the returns.

Forschino said the crackdown is not designed to target illegal immigrants. [Hey us government thieves are equal opportunity thieves and will steal from anyone we can regardless of sex, race or religion]

"We have a responsibility to try and stop fraudulent returns," he 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. [Which will probably never happen, because that means the government will have a lame excuse to steal the money]

"We're looking at the issue to see if we can come up with a little bit more guidelines," he said. "If your employer can say, 'Yes, this is the person that worked for me,' that could work." He said they hope to come up with something within the next week.

Maldonado said about 60 percent of his clients use tax ID numbers rather than Social Security numbers. He doesn't ask his clients about legal status but said many have an invalid Social Security number listed on their W-2 form and likely now won't be getting their refund.

"These are people with families and jobs here; they just don't have documents," Maldonado said. "Many people have called us up in the office, said they're waiting for refunds and not getting them."

Maldonado said he prepares taxes for undocumented immigrants in other states, and Arizona is the first to crack down in such a way.

"I don't understand why there is so much discrimination, so much persecution," he said. "They're trying to fumigate Hispanics like we're cockroaches."