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Senator targets tax ID fraud

By Dionne E. Young -- Medill News Service   |   April 10, 2013 at 5:39 PM   |   Comments

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WASHINGTON, April 10 -- Florida Sen. Bill Nelson has been on a mission for two years to speed up the time it takes the Internal Revenue Service to respond to victims of tax fraud -- and with the help of two powerful senators, he might finally get some action.

Sens. Dianne Feinstein, D-Calif., and Charles Schumer, D-N.Y., announced this week that they will co-sponsor Nelson’s bill aimed at helping victims of identity theft scams that target returns and tax refunds.

“Victims should not have to go through the mountain of IRS red tape.” Nelson said on Wednesday at a special committee on aging where he discussed the Identity Theft and Tax Fraud Act.

Nine of the top 10 cities for tax-ID fraud are in Florida.

According to the Taxpayer Advocate Service, an agency within the IRS that helps resolve taxpayer problems, tax-related identity theft rose more that 650 percent nationwide between 2008 and 2012.

“The low physical risk and high potential for financial gain has made stolen identity refund fraud a crime of choice for drug dealers and gangs,” said Kathryn Keneally, Assistant Attorney General for the tax division, which prosecutes crimes committed by filing false tax returns.

Last year, the division instituted a new rule, known as Directive 144, allowing local offices to expedite the prosecutorial process for these crimes.

For some victims these changes and Nelson’s proposal come too late.

According to the Department of the Treasury’s Office of Inspector General, IRS procedures are not adequately addressing concerns of victims. Taxpayers often receive confusing and conflicting information, which has caused year-long waits for some refunds.

The office also found that $5.2 billion in fraudulent tax refunds has been issued to identity thieves.

“Because of all this, a stranger knows more about me than my family,” said Marcy Hossli, a resident of Lake Worth, Fla.

Hossli, who testified at the hearing, said she has had her taxes filed fraudulently three years in a row. She added that her recent bouts with cancer have contributed to making her vulnerable to tax fraud.

Senators expressed outrage and disbelief at the prolonged time it took the IRS to respond to Hossli.

“If I were the IRS, I would be embarrassed,” said Sen. Claire McCaskill, D-Mo.

The Senate Finance Committee will take up the issue on Tuesday, with IRS officials expected to testify.

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