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U.S. Claims Enforcement Against 389 Tax ID Theft Suspects

Feb. 7 (Bloomberg) -- The U.S. government took action in January against 389 people suspected of committing tax fraud through identity theft, the Internal Revenue Service said today.

The enforcement efforts, which the IRS said included 109 arrests and 189 indictments, came on the eve of the tax-filing season that began Jan. 30 and continues through April 15. The IRS and the Justice Department have been trying to fight an increase in the crime over the past several years.

Criminals with access to Social Security numbers and other identifying information file fake tax returns under other people’s names and claim the refunds. The crime is prevalent at the start of the tax season because it works only if the fake returns are filed before legitimate taxpayers submit their own.

“The IRS is very serious about pursuing identity thieves and protecting the tax-paying public,” Steven Miller, the acting IRS commissioner, told reporters on a conference call. “The more barriers we put up, I think the more likely it is that criminals will turn elsewhere.”

During last year’s tax season, the IRS said it prevented $20 billion in fraudulent refunds, up from $14 billion the year before. For fiscal 2012, the IRS’s identity-theft unit received about 450,000 cases, up 78 percent over the previous year, according to the National Taxpayer Advocate, an independent organization within the agency.

The IRS doesn’t have an estimate for how much money is lost to refund fraud, Miller said.

“We sort of don’t know what we don’t know and didn’t catch,” he said.

The IRS has refined computerized filters that it uses to examine suspicious tax returns for potential fraud and prevent refunds from being sent. The tax agency has increased the number of people working on identity theft to more than 3,000, more than double the number from late 2011.

“The things that we’re trying now, this filing season, may prove out to be ultimately helpful,” Miller said.

To contact the reporter on this story: Richard Rubin in Washington at

To contact the editor responsible for this story: Jodi Schneider at

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