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As the 2013 filing season gets underway, the IRS is intensifying its efforts to crackdown on tax-related identity theft. The agency undertook a nationwide sweep in January that targeted identity theft suspects. The IRS has also upgraded its identity theft screening filters and increased training for employees. 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. The IRS reported that the nationwide sweep in January against 389 identity theft suspects led to 734 enforcement actions that month, including indictments, informations, complaints and arrests.
* IR-2013-17, FS-2013-4, www.irs.gov
As the 2013 filing season gets underway, the IRS is intensifying its efforts to crackdown on tax-related identity theft. The agency undertook a nationwide sweep in January that targeted identity theft suspects. The IRS has also upgraded its identity theft screening filters and increased training for employees.
* CCH Take Away. "The problem of identity theft is definitely growing," Damián Gaspari, CPA, liaison to the IRS from the Pennsylvania Institute of Certified Public Accountants (PICPA), told CCH. In 2012, the National Taxpayer Advocate reported that the IRS had nearly 650,000 cases of identity theft, Gaspari said
* Comment. "In fiscal year (FY) 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 told reporters at a February 7 press conference in Washington, D.C. "We stopped, before any refund, five million suspicious returns this past year," Miller added.
Identity theft
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 reported that it has dozens of identity theft screens in place for the 2013 filing season to protect tax refunds.
* Comment. Miller told reporters that unlike last filing season, taxpayers should not experience delayed refunds because of "glitches" in the identity theft screening filters. "We are strengthening our processing systems to watch for identity theft and detect refund fraud before it occurs," Miller said.
The IRS has assigned more than 3,000 employees to work on identity theft-related issues, the agency reported. Approximately 35,000 IRS employees have been trained in identity theft indicators and to help taxpayers victimized by identity theft.
* Comment. 'Taxpayers need to remember that the IRS never communicates by email, text message or social media about a taxpayer's account," Gaspari said. 'These are phishing scams by scam artists seeking to steal a taxpayer's identity,"
* Comment. 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. For the 2013 filing season, we have issued 770,000 IP PINs," Miller told reporters. Taxpayers receive unique IP PINs each filing season.
January sweep
The IRS reported that the nationwide sweep in January against 389 identity theft suspects led to 734 enforcement actions that month, including indictments, informations, complaints and arrests. IRS Criminal Investigation (CI) personnel and federal, state and local law enforcement officers conducted the sweep.
* Comment. The January sweep took place in 32 states and Puerto Rico, involving 215 cities. The IRS appeared to focus on activities in three states: California, Rorida and New York.
Investigations triple
The IRS reported that the number of criminal investigations into identity theft issues more than tripled in FY 2012. The IRS commenced 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, the agency reported.
Sentences handed down for convictions relating to identity theft have been significant, ranging from four months to 300 months. The average sentence for an identity theft conviction in FY 2012 was four years, according to the IRS.
* Comment. IRS auditors and CI personnel are also visiting money service businesses (commonly known as check cashing businesses) this year. The IRS reported that the visits are designed to help make sure these businesses are not assisting identity theft or refund fraud when they cash checks.
References: FED ff 46, 288, 46,289; TRC IRS: 66,304.
Copyright CCH Incorporated: Federal and State Tax Feb 14, 2013