Sunday, April 14, 2013
The millions of Americans who are rushing this weekend to file their tax returns to the IRS will be relieved to have beaten the April 15 deadline on Monday. But thousands of them, along with thousands of other taxpayers who have already filed, will be stunned when they learn in the coming weeks and months that their returns have been rejected.
Why would the IRS reject them? Because these taxpayers will turn out to have been the victims of identity-theft tax fraud. The increasingly common scam costs taxpayers $5 billion a year.
Here's how this type of identity theft works: The scammer steals an individual's name and Social Security number and uses that information to file a phony tax return. Soon after, he receives a refund from the IRS, which has little reason to question, at least initially, an authentic-lookingreturn. When the actual taxpayer files a return claiming a refund, the return is rejected.
With the increasing popularity of e-filing returns online, the theft has been made easier than ever. According to the IRS, identity-theft tax cases have jumped 650% since 2008, with the IRS working on nearly 650,000 identity theft cases during 2012.
One of the most frustrating aspects of these crimes for many local prosecutors—and I am one of them—is that even though we know the ripoffs are taking place, and we have the resources and expertise to investigate and prosecute, our hands are tied. Current federal law prevents the IRS from turning over the very evidence of the crime—the fraudulent returns—that state and local prosecutors need to bring the scammers to justice....
In a recent report to Congress, the IRS's taxpayer advocate noted that the agency is "falling further and further behind" in blocking fraudulent claims. The feds can't do it alone. Local prosecutors' other federal partners regularly share documents and information with our office. The IRS should be no different.
- USA Today, IRS Losing Identity Theft Fight: Our View
- USA Today, IRS making progress against fraud: Opposing view, by Beth Tucker (Deputy Commissioner, IRS)