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Report: IRS refunded $4B to identity thieves

By Stephen Ohlemacher

Associated Press

LAST UPDATED: 10:07 a.m. HST, Nov 07, 2013

WASHINGTON >> The Internal Revenue Service issued $4 billion in fraudulent tax refunds last year to people using stolen identities, with some of the money going to addresses in Bulgaria, Lithuania and Ireland, according to a Treasury report released today.

The IRS sent a total of 655 tax refunds to a single address in Lithuania, and 343 refunds went to a lone address in Shanghai.

In the U.S., more fraudulent returns went to Miami than any other city. Other top destinations were Chicago, Detroit, Atlanta and Houston.

The IRS has stepped up efforts to fight identity theft, but thieves are getting more aggressive, said the report by J. Russell George, Treasury's inspector general for tax administration. Last year, the IRS stopped more than $12 billion in fraudulent refunds from going to identity thieves, compared with $8 billion the year before.

"Identity theft continues to be a serious problem with devastating consequences for taxpayers and an enormous impact on tax administration," George said in a statement. The fraud "erodes taxpayer confidence in the federal tax system."

Thieves often steal Social Security numbers from people who don't have to file tax returns, including the young, the old and people who have died, the report said. In other cases, thieves use stolen Social Security numbers to file fraudulent tax returns before the legitimate taxpayer files.

The IRS, which takes pride in issuing quick refunds, often sends them out before employers are required to file forms documenting wages, the report said.

"The constantly evolving tactics used by scammers to commit identity theft continues to be one of the biggest challenges facing the IRS, and we take this issue very seriously," the IRS said in a statement. "The IRS has a comprehensive and aggressive identity theft strategy that focuses on preventing refund fraud, investigating these crimes and assisting taxpayers victimized by it."

Despite budget cuts, the agency said, agents have resolved more than 565,000 cases of identity theft this year, three times the number of cases resolved at the same time last year.

A separate report by George said the number of identity theft victims is on the rise as thieves get more aggressive.

Through June, the IRS identified 1.6 million victims who had their identities stolen during this year's tax filing season, the report said. That compares with 1.2 million victims in 2012.

Many of these people didn't realize they were victims until they submitted their returns, only to learn from the IRS that someone else had already used their Social Security number to file and claim a refund.

The IRS does a good job of eventually identifying the proper owner of Social Security numbers, but the process can be lengthy, the report said. For cases closed between August 2011 and July 2012, it took an average of 312 days to resolve the case and issue a proper refund, the report said.

The IRS said has resolved most of this year's identity theft cases within 120 days.

Last year, the IRS issued 1.1 million refunds to people using stolen Social Security numbers, the inspector general's report said. Those refunds totaled $3.6 billion.

Additionally, the IRS issued 141,000 refunds last year to people using stolen Taxpayer Identification Numbers, which are typically used by foreign nationals who earn money in the U.S. Those refunds totaled $385 million, the report said.

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AhiPoke wrote:
This is what happens when you allow people to handle other people's money with no accountability. IF, these refunds were issued by a private contractor, people would be fired and possibly charged with crimes. Since these are federal employees, nothing will happen to them. Our government is out of control. It wastes $100B's each year and growing. We're becoming Greece.
on November 7,2013 | 08:33AM
South76 wrote:
I hear you....this is the same agency that will be enforcing the Obama health tax.
on November 7,2013 | 09:57AM
Anonymous wrote:
You mean penalty right. LOL Obama said it's not a tax.
on November 7,2013 | 10:13AM
MANDA wrote:
Oh please. There is no recourse against private contractors because they're insulated and not held to the same standards, plus the public has no say in how private companies are run.
on November 7,2013 | 01:43PM
lee1957 wrote:
I wonder how many of the identity thieves were named Lois Lerner.
on November 7,2013 | 10:24AM
cojef wrote:
Well the thieves have a new source, the "navigators" hired contract workers who will guide individuals who are not internet savvy. These navigators as Secretary Sebelis testified yesterday that they do not have to have a background checks, yet they will be handing the confidential data from the foregoing individuals. According to one of the Senators, there is already one incident of identity theft reported. Afterthought, it is scary in that as the Secretary testified even a convict could qualify as a "navigator". These individuals are not Government employees, but contracted individuals. It has been reported that so far it has costed over $80,000 to just register a single applicant in Maryland or Virginia. The contractor's award for providing this service was over $350,000. Yep, your tax dollars at work.
on November 7,2013 | 11:21AM
hilopango wrote:
"The IRS sent a total of 655 tax refunds to a single address in Lithuania, and 343 refunds went to a lone address in Shanghai." And NONE of these raised a red flag anywhere...?
on November 7,2013 | 11:32AM
Mythman wrote:
You know. now letting women into combat foxholes, they are going to let people who are not morons into the IRS.
on November 7,2013 | 12:54PM
stingray65 wrote:
They should sent them to work with TSA, IRS look very smart!!
on November 7,2013 | 10:25PM
Dolphin743 wrote:
I think we've found what all the IRS agents SHOULD be working on, instead of harrassing non-profits and citizens who publicly disagree with the administration.
on November 7,2013 | 01:06PM
Hawaiianhaole wrote:
And I got hit with a $30,000 tax bill because I used my hard earned retirement fund's to put down on a first time home purchase which also helped drive the economy. Now we know why the country is heading in the direction its going its run by a bunch of unaccounted for idiots. Wonder what are great elected officials are going to do about this, ("nothing since they benefit from these tax idiots")
on November 7,2013 | 02:44PM
sailfish1 wrote:
"The IRS, which takes pride in issuing quick refunds, often sends them out before employers are required to file forms documenting wages, the report said" -- DON'T send out refunds until the tax returns have been verified against wage documents! Geeeez! come on, get smart!
on November 7,2013 | 09:21PM
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