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SALEM -- The electronic tax return of a Salem woman accused of swindling more than $2 million from the state was manually approved by reviewers, and the Oregon Department of Revenue said Thursday it will re-examine big refunds to ensure there were no additional blunders.
Authorities allege 25-year-old Krystle Reyes used Turbo Tax -- the popular tax preparation computer program -- to file a faked 2011 income tax return with the state in which she reported earnings of $3 million and claimed a refund of $2.1 million.
Turbo Tax issued Reyes a Visa debit card with the full refund amount, and she used the card to spend more than $150,000 before her arrest.
Krystle Marie Reyes was booked into the Marion County Jail for investigation of aggravated theft and fraud, jail documents show.
Derrick Gasperini, a Revenue Department spokesman, said the size of the refund claim triggered the woman's return to be flagged for an inspection.
Multiple people looked at the electronic document and erroneously approved the massive refund, said Gasperini, adding that the highest-level reviewer is ultimately responsible.
"We do not have that many $2.1 million refund claims," he said. "It absolutely should have been caught and was not." Reyes was arrested Wednesday on charges of aggravated theft and computer crime.
She has been released from the Marion County Jail and has a court date scheduled for July 5. She could not be located for comment and it is unknown if she has hired a lawyer.
Because of the mistake in approving Reyes' return, Gasperini said the Revenue Department, which processes $7 billion in tax returns each year, will review its internal controls to make sure a similar error does not happen again.
Moreover, reviewers will take another look at all large-dollar refunds to determine if the state authorized other incorrect and expensive refunds.
"We're looking at the largest ones and working down the list to the smaller and smaller ones," he said. "I'm not exactly sure where we are stopping."
She used the card for a variety of purchases, including a 1999 Dodge Caravan, and $800 for wheels and tires. By then, she was under surveillance and video shows her swiping the debit card, the affidavit said.
Derrick Gasperini, a Revenue Department spokesman, told the Oregonian that he couldn't comment until after a Reyes' court appearance scheduled Thursday.
He said it is common for the tax preparation company to issue prepaid debit cards to clients who get refunds using their software. When the state issues refunds, it typically does so with a check or a direct deposit to a bank account, he said.
The Department of Revenue processes about $7 billion in tax returns each year on computer systems designed in the 1980s, the newspaper reported.