A Florida man mistakenly received a $980K tax refund, and officials say he tried to keep it

The average tax refund is usually a couple of thousand dollars, but a man in Florida who earned less than $3,500 mistakenly received a check for a much higher amount: $980,000.

How?

He filed his taxes.

The man, 29-year-old Ramon Blanchett, filed a 2016 income tax return in February 2017 that included a W-2 from Bridges Nursing and Rehabilitation in Tampa, Florida, showing $17,098 in wages and $1 million of federal income tax withholding, according to a forfeiture complaint filed in January by the U.S. government in federal court in Tampa.

But Blanchett was actually paid $2,098 and no tax was withheld, according to the complaint, which was first reported by the Tampa Bay Times.

Blanchett submitted a 1040 form that also said $1 million in taxes had been withheld, and that led the IRS to issue a refund for $980,000, according to the complaint.

And he kept the money, the complaint said — until the IRS found out about the error.

The complaint did not mention how the W2 came to include incorrect information. Representatives for Bridges Nursing and Rehabilitation did not respond to a request for comment this week.

Blanchett also submitted another W2, which was accurate, showing $1,399 in income from Sizzling Platter, a restaurant in Murray, Utah, and no withholding, the complaint said.

Robert Marvin, a spokesman for the IRS, declined to answer questions about the case, citing a section of the Internal Revenue Code that prohibits the IRS from commenting on a specific taxpayer’s situation, and he did not immediately respond to queries about the systems in place to detect fraud on Friday.

Blanchett could not be reached for comment Friday, and it was unclear whether he had retained a lawyer.

The IRS’ refund processing systems should have flagged a refund this large, said Chuck Pine, who was the third-ranking criminal-enforcement officer at the agency and now oversees the risk and regulatory advisory practice at BDO USA, a global assurance, tax and financial advisory services firm.

Taxpayer refunds are sent out in batches via an expedited electronic system, Pine explained. If a refund is red-flagged, it ought to prompt a closer examination by an IRS employee who “should have immediately and proactively stopped the refund from being issued based on the obvious discrepancy between the income reported of $18,497 and the refund generated of $980,000.”

Blanchett has not been charged in federal court, Amy Filjones,spokeswoman for the U.S. attorney’s office in Tampa, said Friday. A date for the next hearing has not been set, said a spokesman at the U.S. attorney’s office.

According to court records, Blanchett pleaded guilty in 2016 to possession of drug paraphernalia and resisting an officer without violence, both first-degree misdemeanors. In 2014, he was charged with possession of marijuana, also a first-degree misdemeanor, but the judge withheld adjudication, so he was not convicted of a crime.

SunTrust Bank, where Blanchett initially deposited the funds, suspected fraud and initially froze the funds, court documents said, but later returned them to Blanchett via cashier’s check. He then put the money into an account at Grow Financial, telling the bank that the money came from the estate of his deceased father, the documents said.

Blanchett shifted the money around, transferring it among different bank accounts within Grow Financial, the complaint said, eventually using some of it to purchase a silver Lexus in August. On Friday, a spokeswoman for SunTrust and a spokesman for Grow Financial declined to comment.

The complaint didn’t specify when the IRS first learned about the inaccurate refund check. But in August, Grow Financial sent the IRS the funds in Blanchett’s account in accordance with a federal seizure warrant, the complaint said. The IRS also seized the Lexus, and the government is seeking a car insurance premium of about $809 that was refunded to Blanchett when he no longer had possession of the Lexus.

From 2011 to 2013, when Pine served as director of field operations for the eastern half of the United States, and in the years before, refund fraud was “out of control” in Tampa, he said, primarily because of identity theft.

“Refund crimes may no longer be at such a high priority,” he said, adding that the number of criminal investigation special agents in the IRS was “significantly” lower than it used to be.

“Special agents aren’t on the front line of refund processing,” he said, but they play “a key role” in preventing fraudulent refunds from ultimately being negotiated.

In recent years, the IRS has cut refund fraud drastically, said Jim Buttonow, a certified public accountant who worked for 19 years as a large case team audit coordinator for the IRS until leaving in 2006. “It was a mountain to climb.”

Refund fraud is a continual challenge, he added, but Blanchett’s case was “an absolute anomaly.”