In addition to the nation wide sweep, the IRS launched a special compliance effort involving “check cashing” businesses to make sure they are not helping identity or refund thieves when they cash checks.
The IRS has opened more than 900 identity theft investigations in the 2012 fiscal year. Miller said that is triple the number it was from 2011. Last year, the IRS stopped $20 billion in fraudulent refunds from being issued — up from $14 billion in the previous year. The agency also had more than 3,000 employees dedicated to prevent and investigate identity theft-related crimes by late 2012 — more than double the staffing from 2011.
Sentencings of convicted identity thieves continue to increase. There were 80 sentencings in fiscal year 2011, which increased to 223 in fiscal year 2012.
Jail time is increasing for identity thieves. The average sentence in fiscal year 2012 was four years or 48 months — a four-month increase from the average in fiscal year 2011. So far this fiscal year, sentences have ranged from 4 to 300 months.
“We’ve seen sentences as long as 262 months,” Miller said. “That’s 20 years. What this means is that we’ve increased dramatically the amount of time our special agents spend on this issue. In 2012 we spent more than a half million hours. These numbers show the IRS is very serious about pursuing identity thieves and protecting the tax paying public.”
With the number of E-filings increasing during tax season, the IRS has seen an increase in refund fraud associated with identity theft, also.
Taxpayers can encounter identity theft involving their tax returns in several ways. One instance is where identity thieves try filing fraudulent refund claims using another person’s identifying information, which has been stolen. Innocent taxpayers are victimized because their refunds are delayed.
The IRS have begun issuing Identity Protection Personal Identification Numbers to tax payers who have been victimized by identity theft. It shows that a particular tax payer is rightful filer of a return. It helps avoid delays when filing returns. The IRS has issued almost 800,000 numbers for 2012.