Identity theft concerning IRS goes through the roof, official reports

The Internal Revenue Service has seen a nearly fivefold increase in taxpayer identity theft in the past few years — from 51,702 incidents in 2008 to 248,357 in 2010, Larry Margasak reports for the Associated Press. However, a government official recently told a congressional panel that the IRS hasn’t been chasing many of the perpetrators.

Tax identity thieves typically file returns for refunds earlier than legitimate taxpayers, who then receive notification from the IRS that two returns were filed using the same Social Security number, Margasak wrote.

According to the AP article, James White, director of strategic issues at the Government Accountability Office, said in testimony prepared for a subcommittee of the House Oversight and Government Reform Committee that "IRS officials told us that IRS pursues criminal investigations of suspected identity thieves in only a small number of cases."

White said that in fiscal 2010, the IRS' criminal investigations division launched slightly more than 4,700 investigations of all types — far less than the number of identity theft cases.

In his testimony, IRS Commissioner Douglas Shulman said his investigators concentrate on schemes that are national in scope, and 95 percent of those prosecuted for refund-related identity theft go to prison, according to AP.