Identity theft is becoming increasingly common today as thieves are becoming more sophisticated at finding ways to break into electronic data storage to access personal information. The Internal Revenue Service is doing everything it can to fight a new wave of identity theft tax fraud, which watchdogs say is costing the agency billions of dollars every year.

Identity Theft

IRS statements

The IRS has taken note of the huge increase in identity theft fraud as it relates to tax refunds, and has been ramping up investigation and enforcement actions over the last couple of years. “Identity theft is one of the fastest growing crimes nationwide, and refund fraud caused by identity theft is one of the biggest challenges facing the IRS,” IRS Commissioner John Koskinen explained in an earlier statement. “The investigative work done by Criminal Investigation is a part of an aggressive effort by the IRS to combat this issue on all fronts. We are making substantial progress in refund fraud protection, and the work by CI highlights the important steps we are taking.”

Richard Weber, Chief of IRS Criminal Investigation, commented on the growing identity theft problem. “We remain committed to allocating investigative time and resources to bringing to justice those who steal honest taxpayers’ identities for their own personal gain.”

IRS enforcement activity stepped up

FY 2013

FY 2012

  FY 2011

 Investigations Initiated

1492

898

276

 Prosecution Recommendations

1257

544

218

 Indictments/Informations

1050

494

165

 Sentenced

438

223

80

Earlier today, April 11th, the IRS announced it has begun 295 investigations into tax-related identity theft and fraudulent refund claims so far this year, and that identity theft enforcement actions are being pursued in every criminal investigation field office nationwide.

Recent IRS identity theft investigations

Earlier this year, two people in Tampa, Florida were convicted of a scheme using stolen identities to file 322 fraudulent tax returns supposedly worth almost $3 million in refunds. They were each sentenced to more than ten years in prison.

In Georgia, a tax preparer was sentenced to 21 years and ordered to pay $7 million in restitution after being convicted of identity theft of over 15,000 clients, homeless people and prisoners. The scammer used the false identities to file for $19 million in fraudulent refunds. The IRS also seized nearly all of his assets, including millions of dollars worth of real estate and large sums in multiple bank accounts.

The Los Angeles criminal investigation field office also recently brought a case against 10 tax return preparers who had filed scores of fraudulent tax refunds claiming millions in refunds.