IRS steps up arrests of identity thieves and tax fraudsters

Register now

The Internal Revenue Service has been increasing its efforts to crack down in recent weeks on tax-related identity theft, working with the Justice Department and federal prosecutors around the country to make 11 arrests and indict 15 individuals, as well as see five other individuals or businesses sentenced for participating in refund fraud or identity theft schemes.

The IRS revealed the results Wednesday of a national two-week enforcement and education campaign to combat tax refund crimes and identity theft that led to legal actions against suspected criminals and businesses committing tax crimes. Through its Security Summit initiative, the IRS has teamed up with state tax agencies, the software industry, the tax industry, tax preparation firms, payroll and tax financial product processors since 2015 to fight identity theft refund fraud to safeguard taxpayers.

"Identity theft is a pervasive crime and stopping it remains a top priority of the IRS," said IRS commissioner Chuck Rettig in a statement. "The IRS, with the help of our Security Summit partners, continues to make progress in this area, but we need to continue our significant efforts to protect taxpayers and assist those who have been a victim of identity theft. We are fighting this problem with enhanced systems, smarter technology and the efforts of our dedicated workforce, including Criminal Investigation. We will retain our relentless, vigorous pursuit of those who prey upon others in this arena."

The IRS’s Criminal Investigation unit is also working to investigate and prosecute unscrupulous tax preparers this tax season.

“Millions of taxpayers put their trust in tax professionals to prepare accurate and lawful returns,” said IRS criminal investigation chief Don Fort in a statement. “Unfortunately, a few bad apples take advantage of that trust for their own greed and profit. CI's special agents are highly skilled at unraveling fraudulent schemes. With our partners in other agencies and the private sector, we are dismantling these crooked enterprises and enforcing our tax laws.”
Earlier this month, a group of Senate Democrats wrote a letter to Rettig complaining about the IRS's enforcement priorities, in light of a recent series of articles by ProPublica on how low-income taxpayers claiming the Earned Income Tax Credit are increasingly more likely to be audited by the IRS than wealthier taxpayers and large corporations. The lawmakers, including Senators Dick Durbin, D-Ill., Sheldon Whitehouse, D-R.I., Elizabeth Warren, D-Mass., Richard Blumenthal, D-Conn., and Bernie Sanders, I-Vt., urged the IRS to focus more on financial crimes such as money laundering. "A failure to fully commit to investigate and prosecute tax fraud can have serious implications in the investigation and prosecution of more serious financial crimes, such as terrorist financing or money laundering," they wrote.

They pointed to a report last November by the IRS Criminal Investigation unit showing that the number of special agents responsible for investigating money laundering, violations of the Bank Secrecy Act, and criminal violations of the tax code is at its lowest level in 50 years, thanks to budget cuts. According to a 2017 Treasury Inspector General for Tax Administration report, reductions in staffing and funding for criminal investigation activities at the IRS have contributed to a significant decline in the number of criminal cases initiated and completed by the IRS.

For reprint and licensing requests for this article, click here.
Tax crimes Tax fraud Identity theft Charles "Chuck" Rettig IRS