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A wave of refund tax fraud is fueling demand for stolen IDs. Scamsters had tricked the Internal Revenue Service out of $12.1 million worth of refunds using the stolen names and Social Security numbers of 5,108 dead people–likely taken from the Social Security Death Index. But that, as they say, is yesterday’s news. The IRS told Congress during recent hearings that it has set up a new computer screen to flag fraud relating to the tax returns of recently deceased taxpayers and Internet genealogy sites like Rootsweb.com have limited free access to the death index. So it appears there’s some progress, at least, on that front. Meanwhile, the fraudsters are collecting lists of living identity theft victims, either by planting employees in jobs with access to personal data or corrupting employees who already have such jobs. Former federal prosecutor Latour “L.T.” Lafferty, head of the white collar and corporate compliance practice at Florida’s Fowler White Boggs, reports that he has been hired in the past year by two local employers to investigate employee theft of information. In one case, he found, an employee had used her smart phone to take pictures of records. (The iPhone takes such good pictures that you can actually take a picture of your W-2 with it, and have the information entered into Intuit’s TurboTax app.) “The old identity theft,’’ Laferty observes, “was `may we send you a fake email and find out if you’re dumb enough to give me a Social Security number’ or going through your trash.’’ The new trend, he says, is for employees to steal names and numbers in bulk and then use TurboTax or other software to file large numbers of refund claims. (If they get in a bogus 1040 before the real, live taxpayer, or smartly pick the identity of an American who doesn’t have to file, they may be able to get thousands of dollars back.) In testimony last month before a Senate Finance subcommittee, Tampa Police Department Detective Sal Augeri said that after the information about deceased people had run dry, area thieves turned to individuals who worked in local assisted living facilities and then to other businesses, medical offices and schools. Companies with rich personal data on clients, including banks and health care providers, are the most vulnerable, Lafferty says. But other Tampa area businesses have been hit too. One woman running credit checks on customers gave her access to the crucial personal information. She pleaded guilty in December and was sentenced to three years. So just how much of this is going on? Hard to say. IRS Deputy Commissioner for Services and Enforcement Steven T. Miller told the House Oversight and Government Reform Committee last week that the “IRS has seen a significant increase in refund fraud schemes in general and schemes involving identity theft in particular.” With the help of new identity theft screening filters, he said, as of March 9, 2012, the IRS had stopped 215,000 questionable 2011 refunds worth $1.15 billion from going out. How many refunds have gotten through those filters? He didn’t say and the IRS likely doesn’t really know.