Former IRS Employee Pleads Guilty to Identity Theft

A former Internal Revenue Service employee recently pleaded guilty to stealing taxpayer identities and using them to claim more than $1.7 million in fraudulent refunds, according to the United States Department of Justice.

Monica Nanette Hernandez, who worked as a part-time data entry clerk at the IRS service center in Fresno, Calif., faces up to 20 years in prison and a $250,000 fine for filing false returns, aggravated identity theft and wire fraud.

Hernandez filed false tax returns under her own name for three years in a row — from 2007-2009 — receiving $175,144 in refunds.

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She then stole 68 paper tax returns and used the identities in an attempt to claim an additional $1,745,000, according to the U.S. Attorney's Office. Because she electronically filed these returns from Fresno to IRS locations throughout the country, wire fraud was included among the charges against her. 

The identity theft began in 2010, when according to the U.S. Attorney's Office, she not only stole tax returns before entering them into the IRS computer system but also attempted to file falsified returns using the identity of a relative and other individuals whose information she obtained from "various sites located on the Internet."

"IRS Criminal Investigation has made investigating refund fraud and identity theft a top priority, especially in those situations where individuals with positions of trust commit fraud by taking taxpayer information to file fraudulent tax returns in the name of the stolen identity to obtain a larger tax refund," IRS Special Agent-in-Charge José M. Martinez said in a news release.

Lauren Horwood, a public information officer with the U.S. Attorney's Office, said via email that she could not find any other cases of IRS employees found guilty of stealing taxpayer identities. All IRS potential employees undergo background, fingerprinting and tax checks before being hired, according to the IRS.

However, tax-related identity theft is on the rise, with the IRS initiating 1,492 identity-theft-related criminal investigations last year, up 66 percent from 2012, according to the agency’s report. Prosecutions and indictments in these cases have more than tripled since 2011.

"Identity theft has become a modern-day scourge in American society, for the damage it inflicts on its victims can be personally, professionally, and financially devastating,” said Rod Ammari, Special Agent in Charge, San Francisco Field Division, Treasury Inspector General for Tax Administration (TIGTA), in a news release.

“Those who engage in such crimes need to know that TIGTA and its law-enforcement partners will actively investigate IRS-related identity theft cases, and work with the U.S. Attorneys’ offices where perpetrators will be prosecuted to the fullest extent of the law."

Hernandez is scheduled to be sentenced on April 14  —  the day before this year's tax filing deadline.

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