“Refund fraud caused by identity theft is one of the biggest challenges facing the IRS today,” Danny Werfel, Principal Deputy Commissioner of the IRS, told the House subcommittee of the Oversight and Government Reform panel.
Werfel recently spoke before the 2013 IRS Nationwide Tax Form saying that more than 3,000 IRS employees are currently working on identity theft – more than double the number at the start of the previous filing season. Another 35,000 employees have been trained to work with taxpayers to recognize identity theft and help victims. So far this calendar year, the IRS has worked with victims to resolve more than 565,000 cases. This is more than three times the number of identity theft victim cases that we had resolved at the same time last year.
The IRS has also expanded it’s fraud detection efforts by increasing the number and quality of identity theft screening filters, and have suspended or rejected more than 4.6 million suspicious returns so far this calendar year. The number of identity theft investigations by the Criminal Investigation division continues to rise, with more than 1,100 investigations opened so far in FY 2013.
Criminals with access to taxpayers’ identifying information—sometimes from death records or employer payroll files—can create fraudulent tax returns and obtain refunds before the actual taxpayer is aware of the theft.
Thieves normally file early in the tax-filing season, often before the IRS has received Forms W-2 or 1099, to thwart information matching and avoid receiving duplicate return notices from the IRS. Taxpayers sometimes discover they are victims of identity theft when they receive a notice from the IRS stating that “more than one tax return was filed with their information or that IRS records show wages from an employer the taxpayer has not worked for in the past”
Obama’s 2014 budget plan included proposals to curb a rise in identity theft occurring through tax returns. It called for a $5,000 civil penalty for tax-related identity theft, restricting access to Social Security death records and allowing employers to avoid putting Social Security numbers on W-2 wage reporting forms.
If you believe you are a victim of identity theft, please contact Steve Siesser at firstname.lastname@example.org