January 9, 2014
The Internal Revenue Service says there’s been an alarming increase in cases of identity thieves stealing Social Security numbers to file fake tax returns and claim fraudulent refunds.
The IRS initiated 1,492 identity theft related criminal investigations last year, a 66 percent increase over 2012, according to the agency’s report released Tuesday. Prosecutions and indictments in these cases have more than tripled since 2011.
That number of cases represents many thousands of victims, because a single investigation can involve a large number of tax returns. In one recent case, the government accused an Atlanta man of filing false returns for more than 2,000 prison inmates and collecting more than $12 million in fraudulent refunds.
Convicted identity thieves have faced sentences ranging from two months to 317 months, the IRS said.
In a common scam, thieves use stolen Social Security numbers to file tax returns early in the filing season so they can claim refunds before legitimate taxpayers file their returns. The IRS often sends out refunds before it receives documents verifying wages and other income from employers and financial institutions.
“While Congress and taxpayers rightfully demand that the IRS stop payment on fraudulent refund claims, Congress and taxpayers also rightfully demand that the IRS pay refunds out to legitimate taxpayers immediately,” National Taxpayer Advocate Nina E. Olson wrote in an IRS report in 2012.
Due to the government shutdown in 2013, the start date for filing is a little later for 2014. Business tax filers can begin filing on January 13, and tax-filing season starts January 31 for all others.
The IRS said it continues to fight tax-related identity theft through various efforts, including the Law Enforcement Assistance Program, which discloses federal tax return information of identity theft victims with their written consent to expedite investigations.
A data processing center that centralizes identity theft victims’ lists and information from other federal, state and local agencies during nationwide investigations analyzed 70 percent more identity records last year than it did in 2012, according to the report.
And a nationwide identity theft enforcement sweep in January 2013 resulted in 109 arrests, 189 indictments and other actions related to identity theft and refund fraud involving 389 people.
The IRS offers a number of tips on how to protect yourself from becoming a victim of identity theft and what to do if you think you are a victim.
Identity theft is one of the fastest growing crimes nationwide. Refund fraud caused by identity theft is one of the biggest challenges facing the IRS, according to the agency, and combatting it remains a top priority in 2014.