IRS Cracks Down on Stolen ID Tax Fraud

With the April 15 tax deadline looming, the Internal Revenue Service is cracking down on stolen identity tax fraud. The IRS is investigating more than 1,800 active identity theft and refund fraud cases — nearly 300 of those started this year.

In 2012, the IRS issued $4 billion in fraudulent tax refunds to criminals who were using other people's personal information, according to a government report.

However, in a recent address to the National Press Club, IRS Commissioner John Koskinen noted that in 2013, the IRS "protected $17.8 billion from refund fraud."

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"We’re also doing a lot better at helping identity theft victims clear up their IRS accounts after they have been victimized. The time for resolving a new case has been reduced from over 300 days to roughly 120 days. But there’s still room for improvement, and we intend to do even better," Koskinen told the group.

The amount of time the agency dedicates to identity theft related investigations has increased 216 percent over the last two years. In 2013, the IRS initiated about 1,492 criminal investigations for identity theft, an increase of 66 percent over the prior year.

A majority of false claims made with stolen identities are made online. Misuse of e-filing ID numbers assigned to tax preparers is a new focus for criminal investigations this year. Nearly 400 stolen or fraudulently acquired ID numbers have been revoked or suspended this year.

The IRS Criminal Investigation division has 25 field offices across the country looking into stolen identity refund fraud, one of the fastest-growing crimes in the nation. Since January, the Criminal Investigation division has initiated 295 cases and seen 221 indictments. The average amount of time served for these types of cases is four years.

"We remain committed to allocating investigative time and resources to bringing to justice those who steal honest taxpayers’ identities for their own personal gain," Chief of IRS Criminal Investigation  Richard Weber said in a statement. "Virtually every Criminal Investigation field office is working identity theft and refund fraud cases."

These investigations led to 23 enforcement actions in one week from Miami, the No. 1 city in the nation for identity theft. In Los Angeles, 10 tax preparers were indicted for seeking millions of dollars in false refund claims.

Recent convictions based on these more aggressive investigations include a Georgia tax preparer sentenced to 22 years in prison and ordered to pay $7 million for stealing thousands of identities and filing more than $19 million in bogus refund claims, as well as a Miami man who filed 53 false claims with stolen identities. 

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