In March, a Clinton woman received a phone call from a special agent of the Internal Revenue Service. He told her the IRS detected someone filed an income tax return, claiming a return, in her name. The woman did not file her tax returns yet.
This is an example of identity theft involving tax fraud.
One of the dangers of identity theft is someone with your personal information, especially your social security number, can file a tax return in your name and claim the refund. It’s likely you won’t realize this until you do get notification from IRS, or you notice a delay in your refund.
From my research, it looks like this kind of fraud is quickly increasing. The IRS tells us they realize what an issue this is for taxpayers, and are devoting much greater resources in 2013 than in previous years to preventing, detecting, and prosecuting this kind of tax fraud.
The IRS reports in 2011 they prevented $14 billion in refund fraud, and this rose to $20 billion.
The Clinton woman said the IRS contacted her about the fraud. This is likely the result of their identity theft screening filters. They report great expansion in the number and quality of their filters, which spot fraudulent returns before refunds are issued. They report using “dozens” of filters.
They report 3,000 employees, double the number from 2011, working on identity theft. They report arrests of identity thieves in tax cases will almost triple from 2012 to 2013.
And it does not sound like this tax fraud arrest is a slap-on-the wrist deal. Court records show sentences like 21 years in federal prison to a Memphis woman who stole records from the Memphis Police Department and then sold them to others who electronically filed tax returns. Or 9 1/2 years to a Chicago man who used names of 470 dead taxpayers to file return claimining $120 million in refunds from 2007 to 2011.