When Krystle Reyes of Salem, OR filed her state tax return via Turbo-Tax, she decided to add a couple zeros to some key figures. Reyes overstated her income by $3 million and requested a $2.1 million refund. She got it.
In the age of computers, you may be surprised to see that this scam was missed. You may be especially surprised now that IRS and state notice season is in full swing. Many taxpayers are getting notices ranging from that one bank interest 1099 that they missed to income they reported in one place where the IRS computer was expecting it somewhere else. So while you are dealing with a computer generated IRS notice, you can think of Reyes at the mall spending $150,000 of her $2.1 million refund before she was caught. Or, if you prefer, you can think of her sitting in a jail cell for tax evasion, theft charges, computer crimes, and of course methamphetamine possession.
In this case, the computers are not to blame for the error. Oregon Department of Revenue computers flagged Reyes’ $2.1 million refund, but the agents who manually reviewed her return allowed it to go through. Reyes then had Turbo-Tax load the money on to a state debit card and headed to the mall. $150,000 later, she got caught. Perhaps the best part is how she got caught. After her mall shopping spree, Krystle Reyes lost the debit card and reported it lost or stolen.
If it makes the Oregon Department of Revenue feel any better, at least she was thrifty. With a $2.1 million cash card, Reyes’ first splurge was a $2,000 1999 Dodge Caravan.