A federal grand jury charged three Ohio women with conspiring to defraud the U.S. government. The women are accused of stealing the identities of mentally disabled adults in order to obtain $170,000 in tax refunds. Social Security numbers and other personal identification were used to file false claims, which were allegedly deposited into bank accounts controlled by the defendants.
This case, and the dozens of similar offenses recently seen across the country, is part of a massive nationwide crackdown on identity thieves—a problem that the Internal Revenue Service is calling a “top priority.”
Last week, the IRS, the U.S. Justice Department, and several other federal and state agencies joined forces in an aggressive operation targeting 105 people in 23 states. The unprecedented effort included indictments and arrests involving the potential theft of thousands of identities and taxpayer refunds.
IRS Commissioner Doug Shulman said the crackdown was intended to send a strong message to anyone considering participating in a refund fraud scheme this tax season.
“We are aggressively pursuing cases across the nation with the Justice Department, and people will be going to jail,” he said in a statement.
Over the past few years, the IRS has seen a significant increase in refund fraud with a growing number of cases involving identity theft. The agency says that since 2008 more than 404,000 taxpayers have been impacted by stolen identity.
With more schemes involving several millions in false returns, the IRS has been forced to step up its efforts. Last week’s crackdown reveals that personal identification is stolen from a wide variety of places and through a broad range of means.
Court documents from a case in Detroit indicate that some identity thieves learn their craft in seminars, where they are given explicit instructions on how to prepare and file false tax returns.
In some cases, like those in Ohio, thieves exploit particularly vulnerable individuals, while other offenders steal identification from the recently deceased.
In New York, three Chase Bank employees allegedly participated in tax refund schemes that used the identities of Puerto Rican citizens to obtain more than $3 million in fraudulent tax returns.
Thieves often work in groups, and sometimes the schemes can involve a network of accomplices who serve to cover any suspicious tracks. Participants in the Chase Bank scheme, for example, had illicit refund checks directed to routes assigned to a postal worker who had been bribed to pull them from the mail. The checks were then cashed at a Chase bank branch by tellers who had been bribed to make the transactions without proper reports.
The IRS says the recent crackdown is part of a comprehensive identity theft strategy to prevent, detect, and resolve identity theft cases as soon as possible. The agency announced that they currently have more than 250 check-cashing operations under audit across the country looking for indicators of identity theft.
In November 2011, IRS Deputy Commissioner Steven Miller told the U.S. House Oversight Committee that the agency had substantially increased its resources devoted to both prevention and assistance of identity theft.
Miller outlined a number of steps the agency was taking to address the problem, including improved screening filters to spot suspicious returns, and assistance to identity theft victims, as well as joint criminal investigation efforts like the one seen last week.
Efforts seem to be working—the IRS said it protected as much as $1.3 billion in refunds from identity thieves in 2011 alone. But with so much taxpayer money at the mercy of phony returns, it’s a battle the IRS can’t afford to lose.
“Even in a declining budget environment, we are hiring and training new staff to address the growing challenge of identity theft,” said Miller in his testimony. “Fighting identity theft will be an ongoing battle for the IRS, and one where we cannot afford to let up.”