CLEVELAND, OH— Identity theft by criminals fraudulently obtaining tax returns is turning into an epidemic, with more than two million suspected fraudulent tax returns currently under review by the Internal Revenue Service (IRS). U.S. Sen. Sherrod Brown (D-OH) today joined Michael Bucalo, of Akron, whose identity was used by a criminal to fraudulently obtain Bucalo’s tax return, to outline legislation he is supporting that would increase penalties for thieves who file false returns and expedite tax returns to Ohioans who have been hit by identity theft.

“The deadline to file taxes is right around the corner—and so, too, are criminals waiting to defraud honest taxpayers, like Michael. Identity theft is one of the fastest growing crimes in our country, where increased access to information for consumers also means increased opportunities for criminals—so it’s no wonder that stealing identities to fraudulently obtain tax returns and refunds is turning into an epidemic,” Brown said. “Taxpayers can’t afford to go without their refund—and they certainly can’t afford to pay out billions of dollars worth of illegitimate tax returns each year. That’s why I’m supporting the Identity Theft and Tax Fraud Prevention Act, which would help crack down on this insidious practice and protect taxpayers from fraud.”

Brown outlined how the Identity Theft and Tax Fraud Prevention Act (S.1534) would help crack down on fraudulently filed tax returns and speed the return of long-awaited tax returns to Ohioans whose identities have been compromised. The bill would also require the IRS, Bureau of Prisons, and the Treasury Department to step up identity theft tax fraud prevention programs. Specifically, the bill:

  • Strengthens penalties for tax fraud through identity theft and the improper disclosure of taxpayer information;
  • Gives all ID theft victims a unique personal identification number (PIN) to include on their tax return to prevent fraud and avoid tax refund delays;
  • Allows identity-theft victims to “opt out” of the electronic filing of their federal tax returns;
  • Secures the Social Security numbers of deceased Americans so that fraudsters cannot use them to file fake tax returns;
  • Reallocates IRS resources for tax fraud prevention and detection;
  • Improves coordination, cooperation, and communication between the IRS and local authorities in criminal investigations; and
  • Permanently extends the authority for the IRS to share information with federal and state prison authorities.

Cases related to tax fraud have been on the rise in Northeast Ohio. According to the U.S. Justice Department, a 41-count criminal information was filed charging two Chardon residents with conspiracy to file false claims, filing false claims, misuse of Social Security account numbers, wrongful disclosure of individually identifiable health information and aggravated identity theft. Between 2009 and 2010, the criminals filed at least 35 false 2008 and 2009 income tax returns in the names of 35 separate individuals, without their knowledge, resulting in a total of at least $155,000 in false claims being filed with the IRS.  The same week, a 10-count indictment was filed charging six people—five of whom lived in Northeast Ohio—with various offenses related to a scheme to defraud the IRS of at least $1.7 million in fraudulently obtained tax returns, often filed in the names of recently-deceased taxpayers.

The IRS offers resources to taxpayers that believe that their identities may have been compromised. To reduce the chances of identity theft, the IRS recommends that taxpayers:

  • Avoid carrying their Social Security card or any document(s) with their SSN on it
  • Give a business their SSN only when absolutely required
  • Protect their financial information, including checking their credit report every 12 months.
  • Secure personal information in their homes
  • Protect their personal computers by using firewalls, anti-spam/virus software, update security patches, and by changing passwords for Internet accounts.
  • Never give personal information over the phone, through the mail or on the Internet unless the taxpayer has initiated the contact or is sure who they are dealing with.

Sen. Brown has worked to crack down on identity theft tied to tax return and Social Security Numbers. Last year in Cleveland, Brown revealed that prisoners who filed fraudulent tax returns have cost American taxpayers $123 million since 2004, and called on the Bureau of Prisons and IRS to put an end to the practice. In 2009, there were 1,464 fraudulent tax returns filed by inmates—nearly half of which originated from inmates housed in Ohio’s London Correctional Institution, according to the IRS. Similarly, at Brown’s urging, the genealogy website Ancestry.com agreed to remove Social Security numbers from its website.  Brown first learned that Social Security numbers of deceased individuals are available on genealogy websites following a news report on central Ohioan Roberta Thomas, whose deceased, infant daughter’s Social Security number was used to commit tax fraud.

In the wake of an Ohio mailing that exposed Social Security numbers (SSNs) that also doubled as identification numbers last year, Brown announced his plan to reintroduce legislation that would protect the identity of Medicare card holders. More than 46 million American seniors, including 1.88 million in Ohio, are exposed to identify theft risk each day as their SSNs double as their Medicare ID numbers—which are listed on the Medicare cards they are instructed to keep in their wallets.

###