Justice Department Enlisting U.S. Attorneys to Fight Tax Refund Theft
By Elizabeth Murphy | September 24, 2022 6:15 pm

U.S. Attorneys now have authority to prosecute tax refund identify theft crimes in their own districts, according to a directive sent last week by the Justice Department’s Tax Division chief.

Assistant Attorney General Kathryn Keneally issued the temporary two-year directive as organized criminals become increasingly sophisticated about using stolen identities to file for tax refunds that are due to other people.

Kathryn Keneally

The IRS could pay out $21 billion in fraudulent tax refunds in the next five years, J. Russell George, the Treasury Inspector General for Tax Administration, wrote in a July report.

U.S. Attorney offices across the country now do not need to wait for the Tax Division in Washington to initiate cases. Local federal prosecutors now have the ability to open certain tax-related grand jury investigations, arrest and charge people and obtain warrants to seize fraudulent funds that were transported during a suspected tax refund fraud crime. In addition, the offices can tackle cases involving single-person tax fraud, large-scale schemes and those perpetrated by a tax return preparer, among others, according to the directive.

The directive lasts from Oct. 1, 2012 to Oct. 1, 2014, unless it is otherwise extended by the Tax Division.

The push to involve U.S. Attorneys in combating the crime comes six months after the Washington, D.C.-based Tax Division detailed about one-third of attorneys to federal prosecuting offices around the country. The mass exodus drew criticism from lawmakers in Congress, who said it appeared the division lacked focus. Others said it made the Tax Division appear rudderless after going for nearly four years during the Barack Obama administration without a presidentially appointed and Senate-confirmed head.

Keneally was confirmed a few days after the story about the detailees broke, after months of delays in the Congress. It is not clear what role the details to U.S. Attorney offices played in shaping the new focus on local enforcement of the tax crimes, or whether that focus underlies the strategy of detailing the attorneys last March. A Justice Department spokesman declined to comment.

Division leaders and Internal Revenue Service officials have said tax crime has exploded in the last few years. The IRS reported that it identified nearly a million fraudulent tax returns in 2011, accounting for nearly $6.5 billion.

“As identity theft is the most frequent consumer complaint, and at a time when every dollar counts, these results are extremely troubling,” George, the Treasury inspector general for tax administration, said in his July report.“Undetected tax refund fraud … has the potential to erode taxpayer confidence in our nation’s system of tax administration.”

During a March Senate hearing, an IRS official said the agency is handling nearly triple the number of identity theft cases in 2011 than it did in 2009.

RELATED POSTS:

Comments are closed.

The Senate Democratic leader describes the Republicans' refusal to hold hearings on President Obama's eventual Supreme Court nominee "historically unbelievable and historically unprecedented."


JUSTICE DEPARTMENT NEWS RELEASES
  • Former Owner of Empire Towers Pleads Guilty for Fraudulent $7 Million Bond Scheme and Filing False Tax Return
  • Deutsche Bank's London Subsidiary Agrees to Plead Guilty in Connection with Long-Running Manipulation of LIBOR
  • Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging and Fraud Conspiracies at Public Foreclosure Auctions
  • Service Members to Receive Over $123 Million for Unlawful Foreclosures Under the Servicemembers Civil Relief Act
  • Justice Department and State Partners Secure $1.375 Billion Settlement with S&P; for Defrauding Investors in the Lead Up to the Financial Crisis
  • Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging and Fraud at Public Foreclosure Auctions
  • Eleven Northern California Real Estate Investors Indicted for Bid Rigging and Fraud at Public Foreclosure Auctions
  • Alabama Real Estate Investor Pleads Guilty to Conspiracy to Commit Mail Fraud
  • Five Northern California Real Estate Investors Indicted for Bid Rigging and Fraud at Public Foreclosure Auctions
  • Two Former Rabobank Traders Indicted for Alleged Manipulation of U.S. Dollar, Yen Libor Interest Rates