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Tuesday, Oct 21, 2014
Crime & Courts

Signs of tide turning seen in IRS tax refund fraud battle

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Published:   |   Updated: April 25, 2013 at 09:45 AM
TAMPA -

The official deadline for filing federal tax returns passed last week, but the battle against tax refund fraud will continue for most of the year.

That’s because thieves know the Internal Revenue Service accepts tax returns into October for taxpayers who are due refunds or have filed for extensions.

So far, officials say, there are some signs the stolen identity refund fraud that has exploded in the Tampa area may be receding.

Most striking is a marked decrease in suspicious refund mail intercepted by local postal inspectors.

In the first three months of last year, inspectors stopped the delivery of 45,000 pieces of suspicious mail linked to tax refund fraud, according to Postal Inspector Doug Smith.

In the same period this year, that number fell to 15,000. That’s a 67 percent drop.

However, it’s too early to know whether this reflects a true reduction in fraud activity.

“It could be the suspects have decided to use other methods to get their refunds,” Smith said. “It could be that the IRS (computer fraud) filters are working. It could be a combination of things. It could be a lot of our suspects we put in jail are responsible for a good portion. We don’t know.”

Thieves could be having fraudulent refunds sent to addresses outside the Tampa area. They might be making greater use of direct deposits into bank accounts and debit cards purchased in stores, Smith said.

Other law enforcement officials said they sense the fraud activity might have eased up slightly.

“It seems like I’m not seeing as much evidence of tax fraud being recovered during traffic stops,” said Tampa police Sgt. Pat Kennedy. “Do we still get our fair share? Absolutely. Are we extremely busy? Incredibly busy.”

Cpl. Bruce Crumpler of the Hillsborough County Sheriff’s Office said the number of investigations by his detectives is up slightly — 265 cases, compared with 255 last year — but that may be because people are more aware and reporting more this year.

Investigators have heard that criminals know law enforcement activity is “hot” in the Tampa area and are having their fraudulent refunds sent to other jurisdictions and other states.

Initially hampered by poor coordination and communication with the IRS, law enforcement has become more aggressive in recent months as IRS criminal investigators changed their approach.

“We are in a better position this season in terms of criminal investigations and compliance than we were last year at this time,” said Jim Robnett, who oversees IRS criminal investigators in the Tampa area. “It’s hard to measure statistically right now, but the fact that there’s judicial actions and arrests (and) indictments nearly every week, whether in Tampa or the surrounding area, is a stark difference from where we were last year at this time, and that’s a positive development.”

So far this year, federal prosecutors have brought 21 stolen identity refund cases, said Assistant U.S. Attorney Robert Mosakowski. That compares with 22 in all of last year and 10 in 2011.

Many have pleaded guilty and received federal prison sentences ranging from just over two years to 15 years.

Nationally, the IRS has opened 800 criminal investigations so far this fiscal year, according to acting IRS Commissioner Steven T. Miller in testimony provided Tuesday to the Senate Finance Committee.

Miller called identity theft refund fraud “one of the biggest challenges facing the IRS today.”

In Tampa, Robnett hopes to get the problem under control as soon as possible. “My view from a local view in Tampa — we with our ears to the ground with our partners — we don’t get a sense that the activity has increased,” he said. Robnett said he doesn’t know, though, whether the fraud has decreased.

The civil side of the IRS, the part of the agency that processes tax returns, says it has stepped up efforts to prevent fraud and service identity theft victims.

More than 3,000 IRS employees are working on identity theft, which is more than double the number last year, Miller told the Senate committee.

The agency has expanded the number and quality of its identity theft screening filters and has suspended or rejected more than 2 million suspicious tax returns this filing season, Miller said.

In all of last year, the agency stopped 5 million suspicious returns.

Miller told the committee the Obama administration budget request for fiscal year 2014 includes $101 million to help the IRS prevent stolen identity refund fraud, protect taxpayers’ identities and help identity theft victims.

Miller listed several administration proposals, including one that would allow the IRS to require or permit partial Social Security numbers on W-2 forms to reduce the risk that the information could be stolen by identity thieves.

The agency also has reached agreements with more than 100 financial institutions to reject questionable deposits and has relationships with representatives of the prepaid debit card industry, which is working to detect and prevent fraudulent use of the cards, Miller said.


esilvestrini@tampatrib.com

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Twitter: @ElaineTBO

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