How much did the IRS mistakenly give to tax scam artists who cashed in on fraudulent tax returns last year? Would you believe almost $4 billion?
Believe it. In a report released last November, the federal government admitted that it had conducted roughly 1,500 criminal investigations concerning identity theft in fiscal year 2013. This was 66% more than the previous year.
FBI Supervisory Special Agent Jay Bernardo said, “I’ve been on calls with Alabama, Chicago, some other field divisions, where they’re now experiencing people who were from Florida and now moving to other states to conduct this same type of fraud. Based on the parameters that are in place now, it’s very difficult to stop.”
One of the ways in which thieves commit identity theft is to steal Social Security numbers and file false returns. Another facet of the business is to file multiple false returns and see which returns pan out.
IRS Commissioner John Koskinen told a House subcommittee, “Part of what’s happening is people are reverse engineering. You know, you file a thousand fraudulent returns and then you see which ones go through. … They can adjust faster than we can adjust.”
The IRS said Thursday there are more than 200 investigations ongoing that target identity theft and refund fraud schemes, especially the misuse of specialized identification numbers that are specifically for firms that electronically file tax returns. Last week, federal prosecutors charged 25 people with using thousands of stolen identities to reap $36 million.
A Treasury Department inspector general report said the money stolen was sent as far as Bulgaria, Lithuania, and Ireland. In the U.S., Miami received the most false refunds.
Despite the huge loss of money, Assistant Attorney General Kathryn Keneally, who heads the Justice Department’s Tax Division, boasted that the government is “turning a corner,” adding, “We’re getting more and more sophisticated about how to catch it, how to stop it and how to prosecute it as we go on.”