New tool to assist with growing tax fraud problem
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.”
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.