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Tax collectors step up crackdown on ID fraud

By Kim Dixon

WASHINGTON (Reuters) - The tax collection agency has stepped up its crackdown on identify theft in a nationwide sweep of people filing false tax returns that bilk the government of billions of dollars.

The Internal Revenue Service said Thursday it started 542 criminal identify theft probes in the first four months of fiscal year 2013, which started October 1, 2012. That is double the pace of investigations from the previous fiscal year.

The agency prevented $20 billion in attempted tax refund fraud in fiscal year 2012, up from $14 billion a year earlier.

Acting IRS Commissioner Steven Miller said the agency is still challenged in its attempt to tame rampant identify theft, but is getting a handle on it, despite dwindling resources.

"We have pulled some folks from the compliance side in order to help us, because in our view identify theft and its pernicious nature threatens the IRS," Miller told reporters on a call to announce new data on the agency's efforts.

The IRS issued 353 indictments in the first four months of fiscal 2013, compared to about 500 in all of fiscal 2012. Ninety individuals have been sentenced in four months. Florida and California have been hit hard by the tax fraud, the agency said.

The IRS is devoting more staff to the effort: 33,000 employees at last count, double the employee level from late 2011. The agency has about 90,000 full-time staffers.

(Reporting by Kim Dixon; Editing by Kevin Drawbaugh and Doina Chiacu)

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