IRS Intensifies Work on Identity Theft and Refund Fraud; Criminal Investigation Enforcement Actions Underway Across the Nation

WASHINGTON — As the April 15 tax deadline approaches, the Internal Revenue Service announced today it has started more than 200 new investigations this filing season into identity theft and refund fraud schemes. IRS Criminal Investigation has started 295 new identity theft investigations since January, pushing the number of active cases to more than 1,800.

The coast-to-coast effort by Criminal Investigation is underway as part of a larger effort at the IRS to combat identity theft and refund fraud by pursuing identity thieves, preventing fraudulent refunds from being issued and helping victims of this crime.

“Identity theft is one of the fastest growing crimes nationwide, and refund fraud caused by identity theft is one of the biggest challenges facing the IRS,” said IRS Commissioner John Koskinen. “The investigative work done by Criminal Investigation (CI) is a part of an aggressive effort by the IRS to combat this issue on all fronts. We are making substantial progress in refund fraud protection, and the work by CI highlights the important steps we are taking.”

Since the start of 2014, increased activity by CI has led to more prosecution recommendations, indictments and sentencing hearings, which reflect the overall success by the IRS on the increased number and effectiveness of ID theft filters used during the processing of tax returns.


“We remain committed to allocating investigative time and resources to bringing to justice those who steal honest taxpayers’ identities for their own personal gain,” said Richard Weber, Chief of IRS Criminal Investigation.

A new and key component for IRS-CI’s efforts this year is to investigate the misuse of Electronic Filing Identification Number (EFINS).   An EFIN is assigned to tax preparers that have completed the IRS e-file Application to become an Authorized IRS e-file Provider.   After the provider completes the application and passes a suitability check, the IRS sends an acceptance letter, including the EFIN, to the provider.

IRS Criminal Investigation recognized an increase in the filing of tax returns utilizing stolen or fraudulently acquired EFINs.  Since the start of the fiscal year through March 31, 2014, the IRS has revoked or suspended 395 EFINS based on recommendations from CI, and CI has initiated 60 EFIN source investigations involving EFINS used by individuals involved in refund fraud and identity theft schemes. By revoking and suspending the EFINs, IRS can prevent the transmission of the fraudulent tax returns, thwarting the criminal attempts to steal refunds.

Over the last several weeks all 25 CI field offices across the nation have or are conducting enforcement operations related to refund fraud investigations. For example:

• This week, the Miami Field Office is conducting 23 enforcement actions, including indictments and arrests.  This is Miami’s second surge of enforcement actions within the last six months.
• In the Tampa Field Office, 7 enforcement actions will be conducted. 
• In the Los Angeles Field Office, 10 tax return preparers were recently indicted for seeking millions of dollars in fraudulent tax refunds. 

“Virtually every Criminal Investigation field office is working identity theft and refund fraud cases,” said Weber.

This work reflects the continued high priority being placed on identity theft by the IRS and Criminal Investigation. In Fiscal Year (FY) 2013, the IRS initiated approximately 1,492 identity theft related criminal investigations, an increase of 66 percent over investigations initiated in FY 2012. Direct investigative time applied to identity theft related investigations has increased 216 percent over the last two years. Prosecution recommendations, indictments, and those convicted and sentenced for identity theft violations have increased dramatically since FY 2011. Sentences handed down for convictions relating to identity theft have been significant, ranging from two months to 317 months.