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Warner Questions IRS on Fraud Efforts

APR. 16, 2015

Warner Questions IRS on Fraud Efforts

DATED APR. 16, 2015
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Thurs., Apr. 16, 2015

 

 

WASHINGTON -- Following the April 15th federal income tax deadline, U.S. Sen. Mark R. Warner (D-VA) is requesting more information from the Internal Revenue Service (IRS) about procedures in place to help taxpayers who have been victims of identity theft, and what might be done going forward to proactively alert taxpayers identified as possible victims of identity theft. Yesterday, across the country, taxpayers attempted to file tax returns with the IRS only to discover that a return had already been filed and a fraudulent refund claimed using their identity. Today, Sen. Warner is seeking assurances that preventive information is readily available to help taxpayers protect their personal information so they can receive their tax refunds in a timely fashion.

"As you know, filing and claiming a false return is shockingly easy, with scammers needing only a Social Security number (SSN) and a name to file and claim a false return. The number of these cases has continued to soar, with nearly 3 million incidents of tax-related identity theft reported in 2013, the most recent year for which this data is publicly available," Sen. Warner wrote in a letter to IRS Commissioner John Koskinen. "While the IRS attempts to identify and prevent as many of these cases as possible, often this fraud is only discovered when the legitimate taxpayer files his or her return and finds that two returns have been filed using the same SSN."

Data released by the Government Accountability Office (GAO) has revealed that the IRS issued approximately $5.8 billion in fraudulent refunds during the 2013 filing season.

About 2.9 million incidents of tax-related identity theft occurred in 2013 -- up from nearly 1.8 million in 2012, according to a report from the U.S. Treasury Inspector General for Tax Administration. As a result, hundreds of thousands of taxpayers experienced significant delays in receiving their refunds. The inspector general's report noted that such fraud hurts "the ability of innocent taxpayers to file their tax returns and timely receive their tax refunds, often imposing significant financial and emotional hardships." The inspector general found that, in fiscal year 2013, it took the IRS an average of 278 days to resolve a case of identity theft and issue the correct refund.

"I want to understand what your agency is doing now to help taxpayers and what might be done going forward to be more proactive about helping taxpayers who have been the victims of tax-related identity theft," Sen. Warner continued, asking a series of ten specific questions related to the agency's efforts to address and resolve cases of identity theft.

Today's letter follows on an earlier inquiry from Sen. Warner, who wrote the IRS Commissioner on February 18 pressing the agency on its processes for preventing tax-related identity theft and for notifying taxpayers and law enforcement when the IRS identifies a case of potential fraud.

The full text of today's letter follows.

 

* * * * *

 

 

April 16, 2015

 

 

The Honorable John Koskinen

 

Commissioner

 

Internal Revenue Service

 

1111 Constitution Avenue NW

 

Washington, D.C. 20224

 

 

Dear Commissioner Koskinen:

I write to you to follow up on my previous letter of February 18, 2015 regarding identity theft and taxpayer fraud.

Thank you for your response about the IRS's efforts to protect taxpayers from tax cheats; I appreciate the difficulty of the undertaking and understand that some solutions require a legislative fix.

As you know, filing and claiming a false return is shockingly easy, with scammers needing only a Social Security number (SSN) and a name to file and claim a false return. The number of these cases has continued to soar, with nearly 3 million incidents of tax-related identity theft reported in 2013, the most recent year for which this data is publicly available.

While the IRS attempts to identify and prevent as many of these cases as possible, often this fraud is only discovered when the legitimate taxpayer files his or her return and finds that two returns have been filed using the same SSN. As a report from the U.S. Treasury Inspector General for Tax Administration released earlier this month noted, such fraud hurts "the ability of innocent taxpayers to file their tax returns and timely receive their tax refunds, often imposing significant financial and emotional hardships."

I want to understand what your agency is doing now to help taxpayers and what might be done going forward to be more proactive about helping taxpayers who have been the victims of tax-related identity theft. To that end, I would appreciate your response to the following questions:

 

1. What information will the IRS disclose to a taxpayer who calls because he or she is concerned that they have been the victim of tax-related identity theft?

2. How often and under what circumstances has the IRS notified taxpayers of suspicious tax filing activity?

3. What do third-party vendors do to notify taxpayers of suspicious activity? For example, when a return is e-filed but rejected by the IRS because a return has already been filed under that SSN, what message does the taxpayer receive from the third-party vendor, if any?

4. When the IRS asks a taxpayer to verify their identity because a return with his or her personal information has already been filed, the taxpayer can use the Identity Verification Service site, which is intended to ensure the actual taxpayer has filed the return. How long has this program been in place and how many taxpayers used this website last year to verify their identification?

5. What could be done to expand the Identity Verification Service site to potential victims of other tax scams?

6. As you have noted, the "Where's My Refund" website has been hugely successful. Would there be a way to expand this website so that taxpayers can proactively check to see if a return has been filed using his or her SSN?

7. If the IRS alerts a taxpayer that he or she may be the victim of tax-related identity theft, what steps must the taxpayer take to resolve the situation?

8. If a tax scammer has filed a return using the taxpayer's SSN or Individual Taxpayer Identification Number (ITIN), how long does the process generally take from notification to receipt of the return refund to the right taxpayer?

9. How is the IRS coordinating with other federal agencies, such as the Federal Trade Commission, and other groups, such as consumer advocacy organizations, to alert taxpayers of tax scams?

10. If a taxpayer is able to identify a potential case of identification fraud prior to filing a tax return, would earlier detection prevent the IRS from sending out fraudulent returns or assist in catching the tax scammer?

 

Thank you. I look forward to hearing your responses to this letter.
Sincerely,

 

 

Mark R. Warner
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