With tax filing season heating up, an aggressive Internal Revenue Service crackdown is targeting the growing problem of criminals who use stolen identities to seek tens of thousands of dollars in fraudulent tax refunds.
Acting IRS Commissioner Steven T. Miller said Thursday that a January sweep in 32 states and Puerto Rico identified 389 ID theft suspects, including 109 who were arrested. The number of IRS ID theft investigations tripled in 2012 and is focused on high-risk cities such as Miami, New York, Atlanta, San Francisco, Chicago and Los Angeles.
In 2012, the IRS says its investigations and in-house filtering systems prevented $20 billion in would-be fraudulent refunds, up from $14 billion the year before. But Miller acknowledged that thieves still get away with stealing numerous tax refunds, although the IRS could not provide exact loss figures.
"In terms of how much got past us, we're quite sure some did," Miller told reporters in a conference call. "I know it doesn't approach the number that we stopped."
Like so many other types of fraud, Florida again is a national leader. Florida tops the U.S. in identity theft complaints at 178 for every 100,000 residents, according to the Federal Trade Commission. The Miami area is even worse, at 324 complaints per 100,000 residents. Miller said Miami and Tampa are the epicenters of the problem in Florida.
"Identity theft tax refund fraud has spread though South Florida like a virus," said Miami U.S. Attorney Wifredo Ferrer, whose office has prosecuted numerous tax fraud cases.
Legitimate taxpayers whose IDs are stolen often must wait months to get their refunds. Miller said there's a current backlog of 300,000 cases and an average wait time of 180 days for a resolution.
"I can say we are getting much better," Miller said. "We know that we need to do much, much more."
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