The IRS has seen a significant increase in refund fraud that involves identity thieves who file false claims for refunds by stealing and using someone’s Social Security number. The investigative work done by Criminal Investigation (CI) is a major component of the Internal Revenue Service’s efforts to combat tax-related identity theft.
Statistical Data
In Fiscal Year 2012, the IRS initiated approximately 900 identity theft related criminal investigations, tripling the number of investigations initiated in FY 2011. Direct investigative time applied to identity theft related investigations increased by 129 percent over that same period. Prosecution recommendations, indictments, and those convicted and sentenced for identity theft violations have increased dramatically since Fiscal Year 2010. Sentences handed down for convictions relating to identity theft have been significant, ranging from 4 months to 300 months.
Enforcement Efforts
Criminal Investigation is committed to investigating and prosecuting identity thieves who attempt to defraud the United States Government by filing fraudulent refund claims using another person’s identifying information.
The IRS continues to seek out and identify additional tools and methods to combat the proliferation of tax-related identity theft. For example:
In collaboration with the Department of Justice, Tax Division (DOJ-Tax) and United States Attorney’s Offices located throughout the United States, the IRS conducted highly successful coordinated identity theft enforcement actions during the month of January 2013. This nationwide effort targeted 389 people in 32 states and Puerto Rico, and included indictments, arrests, and the execution of search warrants involving the potential theft of thousands of identities.
The IRS established the Identity Theft Clearinghouse (ITC), a specialized unit within CI dedicated solely to processing and tracking identity theft leads. The ITC’s primary responsibility is to develop and refer identity theft schemes to CI field offices. In addition, ITC provides coordination and administrative and investigative support to ongoing criminal investigations involving identity theft.
Working to assist state and local law enforcement agencies in their efforts to fight identity theft-related refund fraud, CI developed the Identity Theft Victim Disclosure Waiver Process. The program provides for the disclosure of federal tax returns and return information associated with the accounts of known and suspected victims of identity theft with the express written consent of those victims. Prior to disclosing any tax information, victims are required to sign a waiver authorizing the release of information to the designated state or local law enforcement official pursuing the investigation. The program is currently operational in nine states: Florida, Alabama, California, Georgia, New Jersey, New York, Oklahoma, Pennsylvania and Texas. CI expects to expand this initiative to include other states and jurisdictions.
The IRS expanded the scope of chargeable criminal violations to better combat identity theft related crimes. Additional charges include forging endorsements on Treasury checks; theft of public money; fraud in connection with access devices; mail fraud; and wire fraud.
In collaboration with DOJ-Tax, Directive 144, Stolen Identity Refund Fraud (SIRF) was issued, providing federal law enforcement officials with the ability to timely address a subset of identity theft cases. This directive specifically focuses on identity theft in the context of fraudulent tax refunds and provides for a streamlined investigation and prosecution process.
Criminal Investigation participates in the Department of Justice’s Identity Theft Interagency Working Group.
CI held an Identity Theft Summit Jan.17, 2013, where 14 partner law enforcement agencies collaborated with CI in an effort to address identity theft related investigative challenges and priorities.
CI special agents throughout the country are active members on over 35 multi-agency law enforcement task forces and working groups. The combined law enforcement efforts include federal, state, and local law enforcement.