Dent, Gerlach and DAs Take Aim at Tax Fraud Scam

Synopsis: A multi-billion dollar tax return fraud scam is being run by identity thieves. The Lehigh County DA and the Berks County DA have been fighting this scam and they say it’s about time the IRS got into the game. Charlie Dent takes action. He’s introducing a straightforward bill that asks the IRS to double-check their data before issuing bogus tax refunds – thus saving billions of tax dollars and saving local law enforcement from expending resources they don’t have.

The Scam

- Perpetrators buy lists of personal identification information for Puerto Rican citizens who are not required to pay federal income tax
- Puerto Rican citizens only need to file a U.S. federal income tax return with the United States if they have earned income in the continental U.S. or if they are employees of the U.S. Government
- Fraudulent federal tax returns are prepared and filed using the stolen Taxpayer Identification Numbers (TIN)
- In some cases perpetrators solicit the help of U.S. mail carriers to intercept the fraudulently issued tax refund checks
The tax refund checks are cashed at one-stop check cashing establishment

The Impact (Facts and Figures):

- The tax returns are usually around $5,000 to $7,000
- A single Social Security number from Puerto Rico goes for about $8-$10 on the black market.
- This fraud scheme appears to be in the billions of dollars
- In 2011, the IRS reported 938,664 fraudulent returns related to identity theft totaling $6.5 billion, and 582,000 taxpayers who were the victims of identity theft

The Solution:

“Local law enforcement personnel are being forced to dedicate time and resources to combat a crime that is occurring because of data management issues at the IRS,” said Congressman Charlie Dent at a news conference yesterday, in which he as joined by Congressman Jim Gerlach and District Attorneys Jim Martin (Lehigh) and John Adams (Berks). “H.R. 353 requires the IRS to devise a system that will determine if a citizen has filed a U.S. federal income tax return in the United States and in another territory or possession under the same taxpayer identification number. This would stop the potential for fraud at the source.”

The Big Picture:

“We are dealing with big issues in Washington right now," states Dent. "Our debt stands at nearly $16.4 trillion and our federal deficit has exceeded $1 trillion for the past four years. To get our deficit under control, we are going to have to make tough but smart decisions about our spending priorities. We are going to have to take steps to protect and strengthen our entitlement programs. We are going to have to identify and address waste, fraud and abuse. We can save billions of dollars right here. This is a small but important step in righting our fiscal trajectory and protecting our citizens."