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Tax officials are intensifying efforts to crack down on tax-related identity theft with a nationwide sweep in January, upgraded screening filters and increased training.

Nationwide Sweep Targets Identity Theft

  • 2/20/2013

Nationwide Sweep Targets Identity Theft

As the 2013 tax filing season gets underway, the IRS is intensifying its efforts to crack down on tax-related identity theft. The agency undertook a nationwide sweep in January that targeted identity theft suspects, upgraded its identity theft screening filters, and increased employee training.

“The problem of identity theft is definitely growing,” says Damian Gaspari, liaison to the IRS from the Pennsylvania Institute of Certified Public Accountants (PICPA). He notes that in 2012, the National Taxpayer Advocate reported the IRS had nearly 650,000 cases of identity theft.

“In fiscal year 2012 the IRS prevented the issuance of more than $20 billion in fraudulent refunds, up from $14 billion the year before,” Acting Commissioner Steven Miller says. “We stopped, before any refund, five million suspicious returns this past year.”

Identity theft often starts when someone’s personal information is stolen or lost. Identity thieves use a taxpayer's identity to fraudulently file a tax return and claim a refund.

In recent years, the IRS has upgraded its identity theft screening filters that spot fraudulent tax returns before refunds are issued. The IRS reports that it has dozens of identity theft screens in place for the 2013 filing season to protect tax refunds.

Miller says that, unlike last filing season, taxpayers should not experience delayed refunds because of glitches in the identity theft screening filters. The IRS has assigned more than 3,000 employees to work on identity theft-related issues. Approximately 35,000 IRS employees have been trained in identity theft indicators and to help taxpayers victimized by identity theft.

“Taxpayers need to remember that the IRS never communicates by email, text message, or social media about a taxpayer’s account," Gaspari says. "These are phishing scams by scam artists seeking to steal a taxpayer’s identity.”

Taxpayers who have been victimized by identity theft can obtain an identity protection personal identification number (IP PIN) to use on their returns. In 2012, the IRS issued 250,000 IP PINs, Miller says. For the 2013 filing season, 770,000 IP PINs have been issued.

January sweep

The IRS reports that the nationwide sweep in January against 389 identity theft suspects led to 734 enforcement actions, including indictments, complaints, and arrests. IRS criminal investigation (CI) personnel and federal, state, and local law enforcement officers conducted the sweep. It took place in 215 cities in 32 states and Puerto Rico. The IRS appeared to focus on activities in three states: California, Florida, and New York.

Investigations triple

The IRS also reports that the number of criminal investigations into identity theft issues more than tripled in FY 2012. The agency conducted 276 investigations in FY 2011, increasing to 898 in FY 2012. So far in FY 2013, there have been more than 500 criminal identity theft investigations opened.

IRS auditors and CI personnel are also visiting money service businesses (commonly known as check cashing businesses) this year. The visits are designed to help make sure these businesses are not assisting identity theft or refund fraud when they cash checks.

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