IRS reports increased tax refund thefts

Dec. 3, 2012 at 1:48 PM   |   Comments

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WASHINGTON, Dec. 3 (UPI) -- The IRS says the number of Americans whose tax refunds are stolen is rising at an alarming rate and it's going largely unpunished.

The U.S. Government Accountability Office told ABC News the number of incidents of identity theft including tax fraud had increased 62 percent as of Sept. 30, just from 2011. So far in 2012, 641,690 cases have been reported. In 2011, the total was 232,142.

The scheme is relatively simple: Fraudsters obtain a person's Social Security number illegally and file for the person's tax return, often early in the tax season before the individual does so themselves. When the person does file their return, in many cases they're out of luck -- the IRS informs them someone has already claimed the money.

Of the roughly 642,000 cases of fraud reported, just 898 criminal investigations have been undertaken, GAO said.

Banks and other financial institutions are working to help address the problem as well and identified $757 million in suspect tax returns so far this year and returned it to the federal government, but GAO says that's probably only a fraction of what's been stolen.

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