CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. US Issues Directive to Fight Identity Tax Refund Fraud

US Issues Directive to Fight Identity Tax Refund Fraud

by Leroy Baker,, New York

02 October 2012

As part of an ongoing effort to combat tax refund identity theft, the Justice Department’s Tax Division has issued a new directive to further its efforts and those of the United States Attorneys’ Offices to respond quickly and effectively to such cases.

The Tax Division has supervision over virtually all criminal proceedings arising under the internal revenue laws. Tax refund identity theft, involving the use of stolen identities, has emerged as a fast-growing crime, and strong coordination at all levels of law enforcement is seen as vital to combating it.

Directive 144, which took effect on October 1, 2012 and will last for two years (unless extended), has been issued to further those coordination efforts. It will allow prosecutors in US Attorneys’ Offices in tax refund identity theft cases to open grand jury investigations, to charge criminals who are engaged in such crimes and to obtain seizure warrants for forfeiture of criminally-derived proceeds, all without prior authorization from the Tax Division.

The Internal Revenue Service (IRS) Commissioner Douglas H. Shulman, in recent remarks to the American Bar Association, has pointed out that, as “issues like identity theft have continued to rise and perpetrators have tried to use the tax refund system to commit fraud, we have implemented new filters to detect fraudulent returns and new processes for handling returns”.

He said that the IRS’s efforts were paying off: “So far this year, we have stopped more than 3m returns for review. Of those that we have reviewed, 90% have been determined to be bad. This year to date, we have stopped USD15bn in fraudulent payments from going out the door as compared to USD11bn over the same period last year.”

However, earlier this year, an audit report from the Treasury Inspector General for Tax Administration (TIGTA) had found that the impact of identity theft on tax administration is significantly greater than the amount the IRS detects and prevents.

J. Russell George, the TIGTA, noted that, while the IRS has expanded its efforts to detect and prevent identity theft, they still “found multiple reasons for the IRS's inability to detect billions of dollars in fraud. As identity theft is the most frequent consumer complaint, and at a time when every dollar counts, these results are extremely troubling. Undetected tax refund fraud results in significant unintended federal outlays and has the potential to erode taxpayer confidence in our nation's system of tax administration."

Tax refund identity theft crimes covered by Directive 144 involve the filing or attempted filing of fraudulent tax refund claims, using personal identification information such as Social Security numbers that have either been stolen or are otherwise being unlawfully used. The Tax Division has retained its authority in such cases to review and authorize the filing of charges by indictment and information.

“Directive 144 and the new expedited review procedures are the result of a collaborative effort between the Tax Division and the US Attorneys’ Offices to strengthen law enforcement’s response to stolen identity refund fraud crimes, which are an affront to all honest taxpayers,” said the Tax Division’s Assistant Attorney General, Kathryn Keneally. “The prosecution of these crimes is a national priority, and we will continue to look for the most effective ways to bring this conduct to an end and to punish these wrongdoers.”

“Streamlining the authority to prosecute (tax refund identity theft) investigations is yet another step toward combating this fast growing crime,” said Richard Weber, Chief, IRS Criminal Investigation. “We look forward to working with the US Attorneys in aggressively tackling identity theft which has turned the lives of so many innocent taxpayers upside down when their identities have been stolen by thieves whose sole motivation is greed.”

TAGS: individuals | compliance | tax | tax compliance | law | Internal Revenue Service (IRS) | enforcement | tax authority | United States | individual income tax

To see today's news, click here.

Leave a comment

Read our Posting Guidelines

A guide if you are a victim of tax refund, or tax return fraud, by Rick Glaser

Tax return fraud is becoming a bigger and bigger problem every year. Most people panic when they find out they are a victim, and for a good reason.

Read the full article here: Team on Thursday, February 7, 2013

This story is interesting to me because the Dept of Justice is basically saying they have no way of preventing tax return fraud, so they are going to respond more quickly and effective to cases that have ALREADY OCCURRED. Instead of being proactive and figuring out a way to prevent fraud, they're being reactive to the cases that already happened.Tax return fraud CAN BE prevented. A Financial ICONN from TASCET gives anyone filing a return complete control over their identity and ensures that no one else can use another's identity to file on their behalf. The DOJ and IRS would be wise to research this approach and the IRS would be wise to adopt TASCET technology to offer it to those filing

Kevin on Monday, October 1, 2012



Password Reminder

Please enter your email address to receive a password reminder.


Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »

Tax-News+ Updates

Receive FREE daily updates from, straight to your inbox. Register Now!

For a tailored solution, choose to receive selected news updates for your preferred jurisdictions and topics, with our enhanced Tax-News+ subscriber service. Read more...


Stay Updated

Please enter your email address to join the mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.

To manage your mailing list preferences, please click here »