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IRS officials report that 2.6 million individual tax returns have been pulled in 2012 for investigation of possible identity theft.

2.6 Million Returns Pulled for Possible Identity Theft

  • 5/23/2012

2.6 Million Returns Pulled for Possible Identity Theft

The IRS has pulled 2.6 million individual tax returns in 2012 for possible identity theft, Steven T. Miller, deputy commissioner, services and enforcement, told the Council for Electronic Revenue Communication Advancement (CERCA) on May 16. Speaking at CERCA’s 2012 Spring Meeting in Arlington, Virginia, Miller also cautioned that the unusually large number of expired and soon-to-expire tax provisions could create challenges for the 2013 filing season.

Identity theft

Identity theft is on the increase, Miller reported, as is refund fraud. The IRS has designed new identity theft screening filters to spot fraudulent returns before they are processed.

So far this year, the IRS has flagged some 2.6 million returns for possible identity theft, Miller said. On its website, the IRS explained that, once a return is flagged, the IRS will correspond with the sender before further processing the return. This is to make sure that it has identified the right taxpayer.

The IRS is spending approximately $330 million this year to combat identity theft and return fraud, according to Miller.

As identity theft grows, some have called for new safeguards. National Taxpayer Advocate Nina E. Olson has cautioned that increased safeguards could delay delivery of refunds. The timing of taxpayer refunds may need to be discussed, Miller said. "Taxpayer expectations on refunds may have to change."

Expiring provisions

The Bush-era tax cuts are scheduled to sunset after 2012. Additionally, many tax extenders and the alternative minimum tax (AMT) patch expired after 2011. Miller noted that the expiration of the Bush-era tax cuts will not affect 2012 returns filed in 2013, but the extenders and AMT patch, unless renewed, will impact filers on their 2012 returns.

Miller noted that late legislation could delay the start of the 2013 filing season. Passage of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 delayed the start of the 2011 filing season, as the IRS needed time to reprogram its systems. Nonetheless, Miller said he would rather have "a Christmas gift (from Congress) than a Valentine’s gift."

Several practitioners at the meeting predicted that the lame-duck Congress could punt the Bush-era tax cuts. "We may be headed to a short-term [one-year] extension," one practitioner said.


The Modernized e-File (MeF) system is intended to replace the current IRS return filing technology (the legacy system). The legacy system processes returns in several batches daily; MeF is a transaction-based system that allows return originators to transmit returns electronically to the IRS in real time.

"MeF will be the 1040 return processing system for the 2013 filing season," Miller said.

©2012 CCH. All Rights Reserved.