The Internal Revenue Service is expanding a program nationwide to help law enforcement get access to tax return data.
The nationwide expansion aims to help state and local enforcement authorities in all 50 states and the District of Columbia obtain tax return information in an effort to investigate and prosecute cases involving the growing problem of identity theft-related tax fraud.
More than 1,560 waiver requests have been received since the Law Enforcement Assistance Program’s inception from over 100 state and local law enforcement agencies in the nine states participating in the pilot. The expansion took effect Friday, March 29, 2013.
http://liarcatchers.com/identity_theft_investigation.html
“The results of the pilot illustrate that this works as an innovative tool for law enforcement to help pursue tough identity theft situations,” said IRS Acting Commissioner Steven T. Miller in a statement. “This program is an effective way for law enforcement to work with the IRS to pursue identity thieves and protect taxpayers. Expanding the program and making it permanent on a nationwide basis makes sense for victims as well as law enforcement and tax administration.”
Continued Progress
The IRS also announced Thursday continued progress on several areas involving identity theft, including resolution of more victim cases and continued emphasis on criminal investigations
Since the start of 2013, the IRS has worked with victims to resolve and close more than 200,000 cases. This is in addition to the expanded Identity Protection PIN, or IP PIN, pilot, an initiative to protect victims with previously confirmed cases of identity theft by creating an additional layer of security on these accounts.
The IRS has issued more than 770,000 IP PINs to identity theft victims at the start of this tax filing season.
Steven T. Miller
Since October, there have been more than 670 criminal identity theft investigations opened. The criminals being sentenced are spending an average of four years in custody with sentences as long as 20 years.
“The IRS continues to aggressively work identity theft issues on multiple fronts, focusing on helping victims of this terrible crime and pursuing the perpetrators across the nation,” Miller said. “The pilot expansion will help these efforts.”
After an initial, successful pilot that started in Florida last April, the IRS expanded the program to eight additional states in October 2012. Together, the nine states represented a large percentage of the overall identity theft refund fraud seen by the IRS. In addition to the initial state of Florida, the pilot program expanded to include Alabama, California, Georgia, New Jersey, New York, Oklahoma, Pennsylvania and Texas.
Like the pilot program, state and local law enforcement officials with evidence of identity theft involving fraudulently filed federal tax returns will receive permission from the identity theft victim by having them complete a special IRS disclosure form so the IRS can provide law enforcement with the fraudulently filed tax return. Law enforcement officials will need to contact the identity theft victims to request and secure the victims’ consent for disclosure of the records. As previously, the IRS will assist law enforcement in locating taxpayers and soliciting their consent.
Law enforcement representatives can then submit a disclosure authorization form, which the IRS created solely for use by victims of identity theft for this program, to the Criminal Investigation Division of the IRS, along with a copy of the police report and the IRS Identity Theft Affidavit if available. It is important that identity theft victims still submit the original copy of the IRS Identity Theft Affidavit to the IRS according to the instructions on the back of the form that fit their specific circumstances, the IRS emphasized.
Federal law imposes restrictions on sharing of taxpayer information, including information that can be shared with state and local law enforcement. This IRS program allows taxpayers the option to permit information to be shared with state and local law enforcement specifically to assist law enforcement officials with their efforts in pursuing identity thieves. The IRS will process the disclosure forms received and forward the documentation to the law enforcement officer who requested the documents. The documents will not be sent directly to the taxpayer. However, the IRS will continue to work directly with taxpayers to resolve their tax accounts as quickly as possible.
Law enforcement interested in working with the IRS should contact their local IRS Criminal Investigation field office, the IRS noted.
This January, the IRS also conducted a coordinated and highly successful identity theft enforcement sweep (see IRS Conducts Nationwide Sweep to Crack Down on Identity Theft and Tax Refund Fraud). The coast-to-coast effort against identity theft suspects led to 734 enforcement actions in January, including 298 indictments, informations, complaints and arrests. The effort comes on top of a growing identity theft effort that led to 2,400 other enforcement actions against identity thieves during fiscal year 2012.
“The IRS and its law enforcement partners at the federal, state and local level are going after the perpetrators of these crimes, and people are going to jail for a long time as a result,” Miller said.
The IRS has a comprehensive and aggressive identity theft strategy employing a three-pronged effort focusing on fraud prevention, early detection and victim assistance. The agency is continually reviewing processes and policies to ensure that we are doing everything possible to minimize identity theft incidents, to help those victimized by it and to investigate those who are committing the crimes.In fiscal 2012, the IRS prevented the issuance of more than $20 billion in fraudulent refunds—up from $14 billion the year before. IRS efforts stopped 5 million suspicious returns in 2012—up from 3 million suspicious returns stopped in 2011.
Taxpayers looking for additional information can consult the Taxpayer Guide to Identity Theft or the IRS Identity Theft Protection page on the IRS Web site.
Senate Legislation
Sen. Bill Nelson, D-Fla., noted that he had pushed the IRS to create the original pilot program to enable law enforcement to obtain tax return data needed to investigate and prosecute cases of identity theft after his office noticed an increasing trend in tax-related identity theft in Florida, mainly in Tampa and Orlando, about two years ago.
Bill Nelson
The week of April 8, he plans to file legislation to expand the IRS’s ability to combat identity theft as well as lead a hearing of the Senate Special Aging Committee in which he hear testimony from some elderly victims of the tax fraud-ID theft. The bill he is introducing would require faster tax refunds for identity theft victims. The bill would also direct the Treasury Secretary to cut the time it takes to resolve and close identity theft cases in half, from 196 to 90 days.
In addition, the bill would impose new restrictions on ability to use prepaid debit cards to commit tax fraud. The bill would create a separate numbering system for prepaid cards so that the IRS knows when it is issuing a refund to a prepaid card, and could exercise extra care to prevent fraud.
The bill would also create new civil and criminal penalties for selling, purchasing, or displaying Social Security Numbers. Identity thieves obtain SSNs from sources with access to files at doctor’s offices, schools, and nursing homes. Federal laws fail to penalize SSN traffickers. Based on prior legislation introduced by Senator Diane Feinstein, D-Calif., the bill prohibits the sale, purchase, or public display of SSNs and creates new civil and criminal penalties for violations ($5,000 penalty for each instance; maximum of 5 years imprisonment).
Nelson’s bill would also enable the IRS to develop a plan for a real-time tax system. In order to effectively prevent tax fraud through identity theft, the IRS needs to match employer wage data with income reported by employees at the time a tax return is processed. Currently, information matching does not occur until months later. The bill would require the IRS to develop a plan of action for a real-time tax system that accelerates information matching.
