New tool to as­sist with grow­ing tax fraud prob­lem

North Penn Life - - News - By Carl Hessler Jr. chessler@jour­nal­reg­is­ter.com

Tax fraud “crooks and scam artists” be­ware.

Mont­gomery County law en­forcers, thanks to the help of r.S. Sen. Pat Toomey, R-Pa., now have some­thing new in their ar­se­nal to as­sist them in nab­bing those who steal cit­i­zens’ iden­ti­ties to gen­er­ate im­proper tax re­funds.

The In­ter­nal Rev­enue Ser­vice this week an­nounced an ex­pan­sion of a pi­lot pro­gram to al­low law en­force­ment in eight states, in­clud­ing Penn­syl­va­nia, the abil­ity to re­trieve sig­nif­i­cant data needed to tar­get iden­tity thieves.

“I am so pleased the IRS will now be able to co­or­di­nate with lo­cal law en­force­ment of­fi­cials to more ag­gres­sively pur­sue per­pe­tra­tors of tax fraud,” Toomey said at a news con­fer­ence hosted by Mont­gomery County Dis­trict At­tor­ney Risa Vetri Fer­man and sev­eral lo­cal po­lice chiefs. “Clearly, any kind of tax fraud is a waste of tax­payer dol­lars and must be stopped.”

Au­thor­i­ties from sev­eral Penn­syl­va­nia com­mu­ni­ties, in­clud­ing Mont­gomery County, have seen a dis­turb­ing crim­i­nal trend whereby of­fend­ers steal le­git­i­mate So­cial Se­cu­rity num­bers from cit­i­zens and use them to file fraud­u­lent tax re­turns to im­prop­erly ob­tain cit­i­zens’ tax re­funds.

“When the real tax­payer would go to file his or her tax re­turn they would find out from the IRS that a tax re­turn had al­ready been filed and the re­fund had al­ready been given and that their re­turn was not go­ing to be pro­cessed,” Fer­man ex­plained.

One in­ves­ti­ga­tion con­ducted in Mont­gomery Town­ship in­volved al­le­ga­tions that res­i­dents of an en­tire neigh­bor­hood were “hit very hard” by such a fraud scheme, Fer­man said. In­for­ma­tion had been stolen from mail­boxes in that neigh­bor­hood and those neigh­bors’ iden­ti­ties were com­pro­mised, of­fi­cials re­called.

A sim­i­lar fraud case in Lower Me­rion re­sulted in a vic­tim be­ing ripped off to the tune of about $20,000, of­fi­cials said.

“So we have a lot of peo­ple in our community who have been com­pro­mised in this way and I think it’s im­por­tant to work across ju­ris­dic­tions in gov­ern­ment, across branches of gov­ern­ment, to find a way to reach a so­lu­tion,” Fer­man said.

Such fraud cre­ates sev­eral prob­lems, au­thor­i­ties said.

“One, and I think the most ob­vi­ous, is the fact that our gov­ern­ment is hand­ing out money to crooks and scam artists, money that’s not theirs but our tax dol­lars,” Fer­man said. “Se­condly, the le­git­i­mate tax­pay­ers were not able to get their re­funds.”

“Fi­nally, the IRS was just not shar­ing in­for­ma­tion with all of us in law en­force­ment. So, we couldn’t do what we do, which is go af­ter the crooks,” Fer­man ex­plained.

Un­der the ex­ist­ing sys­tem, the IRS could not work with lo­cal law en­force­ment of­fi­cials be­cause tax­payer in­for­ma­tion is confidential.

So au­thor­i­ties couldn’t ob­tain per­ti­nent in­for­ma­tion for an in­ves­ti­ga­tion, in­clud­ing copies of the fraud­u­lent re­turns, copies of the re­fund checks with the fraud­u­lent endorsements or in­for­ma­tion about where the re­fund checks were cashed – in­for­ma­tion that could help de­tec­tives iden­tify the thieves.

“Lo­cal law en­force­ment of­fi­cials could dis­cover the crime. They could find the bo­gus re­turns even, but they couldn’t do much to pros­e­cute this be­cause the IRS has rules and reg­u­la­tions and laws that forced them to with­hold any in­for­ma­tion about cit­i­zens’ tax re­turns from lo­cal law en­force­ment au­thor­i­ties,” Toomey ex­plained.

Learn­ing from law en­force­ment about the in­ves­ti­ga­tory prob­lems, Toomey con­tacted the IRS in Au­gust, ask­ing fed­eral of­fi­cials to ex­plain how the depart­ment is ad­dress­ing the dis­turb­ing trend. In re­sponse, the IRS an­nounced a pi­lot pro­gram un­der which tax fraud vic­tims will be asked to fill out a form giv­ing the IRS per­mis­sion to work with lo­cal law en­force­ment and to share a lim­ited amount of tax­payer data in or­der to tar­get iden­tity thieves.

“This prob­lem came to my at­ten­tion from sev­eral sources. Law en­force­ment folks in sev­eral coun­ties ob­served that this crim­i­nal ac­tiv­ity was ac­cel­er­at­ing and was tak­ing place and it’s very dis­turb­ing,” Toomey said.

Toomey added some of those in­volved in such fraud are in­volved in other crim­i­nal en­ter­prises, in­clud­ing the drug trade.

While the IRS pi­lot pro­gram is “an im­por­tant first step,” it deals only with the ap­pre­hen­sion of the crim­i­nals af­ter the crime has been com­mit­ted, Toomey said.

“The IRS needs to build into its sys­tems the abil­ity to pre­vent the crime from oc­cur­ring in the first place, and that’s a mat­ter of de­vel­op­ing the abil­ity to au­then­ti­cate the iden­ti­fi­ca­tion of the fil­ing so that these crim­i­nals are not able to get checks from the r.S. Trea­sury that they’re not en­ti­tled to,” Toomey said.

Hat­field Town­ship Po­lice Chief Mark A. Toomey, who is pres­i­dent of the Mont­gomery County Chiefs of Po­lice As­so­ci­a­tion, sup­ported the mea­sure.

“The chiefs do sup­port this. It’s very frus­trat­ing for us when we have to turn away peo­ple at the door be­cause they make in­quiries about fraud that they’ve dis­cov­ered and we don’t have the means to pur­sue it,” said Mark Toomey, who is not re­lated to Sen. Toomey. “It’s cer­tainly go­ing to pro­vide the bridge that we need to, if pos­si­ble, help these folks out.”

Dis­trict at­tor­neys in Berks and Chester coun­ties also ap­plauded Toomey’s ef­forts.

“Based upon in­tel­li­gence gath­ered by lo­cal law en­force­ment agen­cies in Berks County, tax fraud has be­come the sin­gle most prof­itable scam tak­ing place in our ju­ris­dic­tion,” said Berks County Dis­trict At­tor­ney John Adams.

“My of­fice is cur­rently in­ves­ti­gat­ing this kind of tax fraud in Chester County,” said Chester County Dis­trict At­tor­ney Tom Ho­gan. “I sup­port Sen. Toomey’s ef­forts and hope the IRS will help crack down on this fraud soon.”

Photo by GENE WALSH

U.S. Sen. Pat Toomey, R-Pa., holds a press con­fer­ence with Mont­gomery County Dis­trict At­tor­ney Risa Vetri Fer­man, right, Wed­nes­day to an­nounce an IRS pi­lot pro­gram that will al­low lo­cal law en­fore­ment of­fi­cials to track tax fraud cases.

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