Krystle Marie Reyes from Salem, Oregon, who was given a $2.1 million tax refund after filing a false claim went on a massive spending spree until she was caught.
Krystle Marie Reyes, 25, was only caught after she reported the Visa card containing the seven figure sum had been lost.
By that time she had already spent more than $150,000, including buying a car and other household items.
Krystle Marie Reyes had used Turbo Tax to file her income tax return for 2011.
She claimed earnings of $3 million but used the tax calculator programme to claim a refund of $2.1 million, Oregon Live reported.
Due to the size of the refund, her electronic claim was examined by several people within the Oregon Revenue Department.
Incredibly they approved the payout and Krystle Marie Reyes was sent a visa card by the tax preparation computer programme containing a balance of $2.1 million.
Prosecutors said she went on a spending spree and spent more than $150,000.
She later reported the card missing prompting an investigation which uncovered the massive fraud which is believed to be the biggest in the history of the state of Oregon.
Krystle Marie Reyes, according to an arrest affidavit, paid $2,000 in cash for a 1999 Dodge Caravan and used the card to buy $800 worth of tires and wheels.
She was also caught on CCTV cameras using the card at various outlets.
According to the probable cause statement, Krystle Marie Reyes spent $13,000 in Marion County over two days in February, $26,000 in March and more than $35,000 in April.
The statement says the fraud was discovered on May 7 by the issuer of the debit card after Krystle Marie Reyes reported a “second card” as lost or stolen.
Oregon Department of Justice agents arrested Krystle Marie Reyes on Wednesday at a Northeast Salem address.
The apparent ease with which Krystle Marie Reyes was allegedly able to defraud the state revenue department has stunned officials.
“They’ve got some explaining to do to restore the confidence of Oregonians,” Rep. Vicki Berger, R-Salem, who serves as co-chair of the House Revenue Committee told the OregonLive.com.
“Is this is an anomaly? If so, let’s make sure it never happens again. Or do we have a systematic problem in the way the Department of Revenue treats this and other transactions?”
The revenue department processes about $7 billion in tax returns each year on computer systems designed in the 1980s.
In January, the state’s chief operating officer, Michael Jordan, pulled the plug on a $100 million computer upgrade that the department said would pay for itself by finding tax cheats.
In 2010, the state reported $559 million in delinquent taxes, mostly from unpaid personal and corporate income taxes.
Revenue officials estimate that, in 2006, Oregon’s personal income tax compliance rate was 81.5% – far lower than other states – and translating to $1.2 billion in unreported or uncollected taxes that year.
Krystle Marie Reyes has been charged with aggravated theft and computer crime.
She was released from Marion County jail and is due in court on July 5th.