WASHINGTON – The federal government has swooped down on 105 people in 23 states in the past week as part of a nationwide crackdown on identity theft and tax refund fraud that was timed to warn cheats to beware this tax season, the Internal Revenue Service said Tuesday.
The sweep ranged from Alaska to Florida and included 80 complaints and indictments and 58 arrests, and has already produced a handful of guilty pleas and sentencings. Besides the IRS, the Justice Department's Tax Division, the Postal Service and local U.S. attorney's offices were involved after investigations that lasted months and, in some cases, years.
IRS officials say the use of stolen identities to fraudulently file for tax refunds, generally involving stolen Social Security numbers, is a growing problem. Last year the agency says it found 260,000 income tax returns with confirmed attempts at identity fraud and blocked the payment of $1.4 billion worth of refunds. In 2010, the IRS says it detected identity fraud in 49,000 returns and prevented the payment of $247 million worth of bogus refunds.
"The timing is not coincidental," Steven Miller, the IRS's deputy commissioner for services and enforcement told reporters. "It's the start of tax season, this is a large issue and we want to send a message out there."
Miller said schools and hospitals are a common source of stolen Social Security numbers.
The cases, some of which were announced previously by local officials, included:
— Three women from Dayton, Ohio, accused of getting tax refunds by using identities stolen from mentally disabled adults;
— A Montgomery, Ala., woman accused of using her job as a security guard to steal identities of people served by a state agency to file false returns;
— A Colorado Springs, Colo., man charged with stealing identities of the clients of a company that had gone out of business to fraudulently file for tax refunds.
Over the past week, IRS officials have also visited 150 money services businesses to see if they are involved in identity theft or filing for bogus refunds. This sweep was conducted in nine metropolitan areas it considers high risk: Atlanta; Birmingham, Ala.; Chicago; Los Angeles; Miami; New York; Phoenix; Tampa; and Washington, D.C.
In addition, the agency is auditing more than 250 check-cashing operations around the U.S., in part to try to spot any identity theft activity.
Miller said the IRS has installed new filters on its computers this year in an attempt to spot identify fraud before the agency pays a phony refund. He said this has caused delays of about a week for early tax return filers to get refunds, but he said he does not expect those delays to last.