Oregon Woman Uses Turbotax To Scam 2 Million Refund - Is tax fraud is running rampant?

An Oregon woman is on the hook for what could be one of the largest cases of tax fraud in the state's history, reports Oregon Live's Harry Esteve.

Krystle Marie Reyes, of Salem, Ore. allegedly weaseled more than $2 million from the state by filing a false return using automated TurboTax software, according to a police affadavit.

Reyes, 25, reported $3 million in wages and claimed $2.1 million in refunds, which worked its way through TurboTax's system and was approved by the state. Soon enough, a Visa debit card loaded with the refund was in her hands.

What's bizarre about the situation is how Reyes was caught. She reported another debit card as lost or stolen to the issuer, which apparently saw enough red flags to get the state's revenue service on the case. The affidavit doesn't say how much cash was loaded on the second card or whether it was obtained through a fraudulent tax return as well.

When Reyes was taken into custody June 6, she had allegedly spent about $150,000 over a two-month period, including $2,000 on a Dodge Caravan and more than $800 in tires and wheels, according to police. It's not clear from the report where the rest of the cash went, though it says she spent tens of thousands of dollars per week.

Her case underscores the debate over whether the IRS should issue refunds via debit cards. On one hand, they're a boon to unbanked Americans who can't rely on direct deposits for speedy returns.

But that also means fraudsters can get their hands on cash faster than authorities can catch them. Reyes was running around Salem for two months before authorities cottoned on – and that was only after she practically served herself up on a silver platter by reporting the card stolen.