IRS Criminal Investigation Kurt Bertram Special Agent Public - - PowerPoint PPT Presentation

IRS Criminal Investigation

Kurt Bertram

Special Agent Public Information Officer

November 5, 2015

IRS Criminal Investigation Mission

Criminal Investigation serves the American public by investigating potential criminal violations of the Internal Revenue Code and related financial crimes in a manner that fosters confidence in the tax system and compliance with the law.

Areas of Emphasis for CI

• Abusive Return

Preparers

• Abusive Tax

Schemes

• Corporate Fraud
• Employment Tax
• Identity Theft
• Financial Institution

Fraud

• Non-Filers
• Money Laundering
• Off Shore Voluntary

Disclosure

• Questionable

Refunds

Return Preparer Program

Common Areas of Abuse

• Paper Tax Returns
• RALS/RACS
• Fraudulent 1040X returns
• Falsify tax return items –

for example Sch A, Sch C, EITC, HSH

Return Preparer Program

Common Areas of Abuse continued…

• Identity Theft – including “floating” SSNs
• Refund Skimming and Theft
• Failure to sign returns

Abusive Return Preparers

• Buy PII from the person who stole it or from

a broker.

• Return filer may be hard to identify.
• Use PII to prepare returns and control how

refunds will be received

Abusive Return Preparer Fraud

FY 2015 FY 2014 FY 2013 Case Initiations 266 305 309 Prosecution Recommendations 238 261 281 Indictments 224 230 234 Convictions 210 193 207 Conviction Rate 96.8% 96% 97.2% Sentenced 204 183 186 Average Months to Serve 27 28 27

Abusive Return Preparers

Case Examples

• Husband and Wife Tax Preparers

Sentenced for Tax and Wire Fraud

• Texas Tax Return Preparers Sentenced

for Tax Convictions

Abusive Return Preparers

Case Examples

• Louisiana Tax Return Preparer, 12 Co-

Defendants Sentenced For $10 Million Tax Fraud, Money Laundering Conspiracies

• Missouri Woman Sentenced For

Orchestrating Tax Scheme to Obtain “Free Money”

False Form W-2

• Figures are not typed in the same format and are not aligned
• Incorrect format of the Employer Identification Number (too many digits)
• Taxpayer name and address do not line up

01-32566-0001 33,965.27 9,362.87 33,965.27 00 67.29 0.00 0.00 123-45-6789 ABC Company 123 Main Street ANY where, USA John Q PuBLIC 456 ELM St Anyplace, Usa

False Form W-2

20,555 10,123

• Excessive withholding in comparison to wages
• Information is missing

False Form W-2

• W-2 with visibly altered money amounts in the federal income tax box
• “Applied For” in Employer Identification Number box

Applied for

Applied For ABC Company 123 Main Street Anywhere, USA 33,965.27

19,362.87

33,965.27 67.29 00

00

123-45-6789 John Q Public 456 Elm St Anyplace, USA 11111

If You Suspect Fraud:

• Preserve fraudulent documents so they can

be produced when requested by the IRS Publication 3857

• Fraudulent returns should not be filed!
• Contact your local IRS office or complete

Form 3949-A available on the IRS website.

Identity Theft

• The FTC estimates that as many as 9 million

Americans have their identities stolen each year.

• Stolen Identities are obtained through various

methods:

• Dumpster Diving
• Skimming
• Phishing
• Theft
• Data Breaches

Identity Theft

• Stolen identities are then used to file

false tax returns in the names of victims

• The false tax returns direct refunds to:

– Treasury Refund Checks – Bank Accounts – Prepaid Debit Cards

Identity Theft Statistics

FY 2014 FY 2013 FY 2012 Investigations Initiated

1063 1492 898

Prosecution Recommendations

970 1257 544

Indictments/Informations

896 1050 494

Sentenced

748 438 223

Percent to Prison

87.7% 80.6% 89.2%

• Avg. Months to Serve

43 38 48

Stolen Identity Refund Fraud (SIRF)

• Aiding in the fight against identity theft,

the Department of Justice-Tax Division (DOJ-Tax) redefined a subset of identity theft cases, known as Stolen Identity Refund Fraud (SIRF), which specifically targets identity theft in the context of fraudulent tax refunds

Trends in Identity Theft

• Refund Schemes involving prisoner identities
• Stolen dependents for additional credits (EITC)
• Use of identity by prior year tax return preparer
• Use of identities of those not likely required to

file a Federal tax return

• Data breaches – payroll, healthcare, education

Prepaid Cards

• The use of prepaid cards in ID theft schemes

has increased significantly.

• Hundreds of billions of dollars are loaded to

Open-Loop prepaid cards each year.

• Numerous government programs employ

prepaid cards to distribute benefits. Past estimates indicate such activity is in the billions each year.

• The prepaid cards add a level anonymity.

Victim Assistance

• Form 14039, Identity Theft Affidavit

– Identity Theft victims should file with the IRS – Victims should attach a police report with the Form 14039 – Victims should file corrected tax return ASAP

Victim Assistance

• File a complaint with the Federal Trade

Commission www.identitytheft.gov

• Contact credit bureaus
• www.Equifax.com
• www.Experian.com
• www.TransUnion.com
• Publication 5027, Identity Theft Information

for Taxpayers www.irs.gov

Questions?

Kurt Bertram Special Agent 816-591-6094 kurt.bertram@ci.irs.gov