Identity theft allows criminals to file false tax returns and claim thousands of dollars in refundable tax credits. In a recent case in Florida, identity thieves allegedly obtained $30 million in fraudulent refunds and nearly obtained $100 million more before being caught. They spent the money on expensive cars and homes, living lavishly under the impression that they could steal from taxpayers with impunity. Recent news stories have also told of identity thieves so brazen that they hold seminars on how to steal identities and commit tax fraud. In another case, scam artists uploaded a music video onto YouTube showing the cars they were able to purchase with stolen taxpayer dollars and instructing others how they can do the same.
Confronted with emboldened identity thieves and tax cheats, the American taxpayers expect the federal government to better protect identities, detect fraudulent tax returns, punish those engaged in these crimes, and assist taxpayers who are victimized. Today, we will explore how well the federal government is living up to this responsibility and how we can improve these efforts.
This morning’s hearing will seek to answer four questions.
First, how does identity-theft related tax fraud occur? Identity thieves often rely on public sources of sensitive information to engage in tax fraud, and the Subcommittees look forward to hearing from the witnesses on how this information might be limited or better protected in a way that protects taxpayer identities.
Second, how big is the problem? While the IRS has estimated that identity-theft related tax fraud costs taxpayers more than $6 billion annually, we will hear testimony this morning that the true figure may be nearly double previous estimates.
Third, what tools are needed to better deter, detect, and punish this crime? Fruitful discussions of fraud, waste, and abuse should include not just details of the problem, but also talk of potential solutions, and I look forward to hearing from our witnesses on that.
Finally, this morning’s hearing will focus on victimized taxpayers, and what their experience is when they learn they have been the victims of identity theft and how the government might better assist them in recovering from the crime and better protect their identities.
I thank our witnesses and look forward to this morning’s discussion.