Tax Returns, ID Theft, and the IRS Criminal Investigation – What Law Enforcement Needs to Know

Guest Blogger – Denise M. Rocawich, National ID Theft Coordinator, Criminal Investigations Division of the Internal Revenue Service

Criminal Investigation (CI) is the law enforcement branch of the Internal Revenue Service (IRS).  As the law enforcement branch of the IRS, CI serves the American public by investigating potential criminal violations of the Internal Revenue Code and related financial crimes in a manner that fosters confidence in the tax system and compliance with the law.

Since 2009 CI has seen a tremendous increase in tax fraud involving identity theft.  Tax fraud involving identity theft usually occurs when the identity thief uses a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund.  Generally, the identity thief will use a stolen social security number (SSN) to file a forged tax return and attempt to get a fraudulent refund early in the filing season.  Over the past several years CI has made great strides in the combat against identity theft.  This includes working within the IRS, working with the Department of Justice (DOJ), and working with federal, state, and local law enforcement.  Within the IRS, CI has worked with the civil functions to create filters which in turn are used to identify fraudulently filed returns.  In September 2012, DOJ Tax issued Directive 144, Stolen Identity Refund Fraud (SIRF).  SIRF provides Federal law enforcement officials with the ability to timely address identity theft cases, specifically focusing on identity theft in the context of fraudulent tax refunds and provides for streamlined initiation of these investigations and prosecutions. In March 2013, IRS announced the nationwide expansion of the Law Enforcement Assistance Program (LEAP).  Specifically the LEAP provides for increase in resources (i.e. tax information) available to prosecute identity theft cases; and assist the State in prosecuting the cases they would normally prosecute by providing needed tax information.  It should be noted that the intent is not to push these cases to the State in lieu of Federal prosecution but instead use all resources (federal, state, and local) to aggressively prosecute these cases.  The Program uses a multi-functional effort involving personnel from various functions within IRS including CI.  It allows for the disclosure of returns, and return information, associated with accounts of known and suspected victims of identity theft with the express written consent of those victims.  Prior to disclosing any tax information, victimized taxpayers are required to sign a waiver (Form 8821-A) authorizing the release of any information to the designated state or local law enforcement official pursuing the investigation.  CI coordinates liaison activities with the local law enforcement officials participating in the program, handles incoming calls from victims responding to letters seeking their assistance, and coordinates any necessary witness testimony in conjunction with other operating functions within IRS. The Form 8821-A is designed to be used solely for state and/or local law enforcement officials’ in investigating and ultimately prosecuting perpetrators in the state/local judicial system.  Federal law enforcement agencies already have a method to obtain tax information from the IRS through a federal ex parte court order.

In addition to the above ways CI is combating identity theft fraud CI currently participates in over 70+ task forces/working groups throughout the country which investigate both financial crimes as well as identity theft crimes. CI’s level of commitment towards the fight against identity theft is further evident through a designated management official to serve as the National ID Theft Coordinator to oversee national efforts concerning policy, procedures, etc.  In addition to a National Coordinator there are ID Theft Coordinators within each of our 25 Field Offices.  For additional information on identity theft or to find an ID Theft Coordinator who handles your state please call National ID Theft Coordinator Denise Rocawich at (912) 280-5279.

You can access IACP’s resources on identity crime here.

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