IRS sweeps aim at stopping ID thieves

Feb 8 2013 - 12:12am


The IRS announced a new, aggressive attack against people who use stolen Social Security numbers to steal income tax refunds, including a national sweep in January that involved 32 states, 389 individuals and "hundreds of information actions."

Acting IRS Commissioner Steve Miller told a national telephone news conference Thursday that the IRS is ramping up enforcement efforts against refund fraud even as its total budget faces cuts of $300 million this year. He said the work pays off because last year it prevented the issuance of $20 billion in fraudulent refunds, up from $14 billion the previous year.

Refund fraud occurs when someone files a tax return using a stolen Social Security number. The refund for that number goes to the thief, and when the real person files they discover they've been robbed.

Miller said it is a huge problem, with half a million potential cases while his investigators struggle to clear 300,000 a year.

He said the IRS is spending half a million man-hours on the problem this year, double last year. In the 2012 tax year it opened 900 ID theft investigations, triple the number the previous year. In 2013 so far, it has opened 500 more.

Total enforcement actions, which he said are the various legal steps from arrest to prosecution and conviction, are "rapidly increasing."

"After just four months in fiscal 2013, enforcement actions already total 1,703 against 907 suspects," he said. "And when these individuals go to jail, they're spending an average of four years in custody. We've seen sentences as long as 262 months -- that's more than 20 years."

That number of enforcement actions is nationwide. In Utah, the IRS said, there were 10 in fiscal year 2012, seven in fiscal year 2013, and one during the sweep in January.

Miller said the IRS is increasing its activities because "we recognize how serious a problem identity theft is for taxpayers and for the tax system. With the tax filing season now under way, we want to be clear that there is a heavy price to pay for committing refund fraud and identity theft."

An indication of how big the problem is, he said, can be seen in how many fraudulent returns the IRS snags and stops before a refund is issued.

"We stopped before any refund 5 million suspicious returns this past year," he said. "In addition, we have been issuing Identity Protection Personal Identification Numbers, or IP PINs as we call them, to taxpayers victimized by identity theft."

He said the PIN will show that the taxpayer filing the return is the correct filer. "This allows identity theft victims to avoid delays when they file future returns. In 2012 we issued 250,000 IP PINs, and for the 2013 filing season we have issued 770,000."

Ultimately, he said, the goal is to let taxpayers know that the IRS is working hard to make the system secure.


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