(CNSNews.com) – Rep. John Mica (R-Fla.), chairman of the House Oversight and Government Affairs Subcommittee, said Friday that defrauding the Internal Revenue Service has become so easy that drug dealers are leaving the drug trade to file fraudulent tax returns using stolen Social Security numbers.
“In fact, this has become such a lucrative business for criminals that criminals in fact are leaving the drug dealing trade, we’re told, and now getting into applying and also asking for these fraudulent returns from IRS,” Mica said at the hearing on identity theft and tax fraud. “So, it’s being said that tax fraud is actually taking work away from drug dealers, because it’s easier and safer to scam the IRS than it is to sell drugs."
Incidents of identity theft related tax fraud have grown 413 percent over a five-year period – from 456,000 to roughly 1.9 million cases in 2013, Mica said, citing statistics from the National Advocate’s 2012 Annual Report to Congress.
“Incidents of identity theft affecting tax administration have continued to rise since Calendar Year (CY) 2011, when the IRS identified more than one million incidents of identity theft. As of June 29, 2013, the IRS had identified almost 1.9 million incidents of identity theft thus far in CY 2013,” Michael McKenney, acting Deputy Inspector General for Audit for the Treasury Inspector General for Tax Administration, said in written testimony on refund-related identity theft before the subcommittee.
“Sad part about this for the average person when they do file these fraudulent return claims is that it takes more than a year in most instances to try to get their identity problems resolved, sometimes to try to get their credit restored, and very often to actually just get their lives back together,” Mica said.
Victims of identity theft related to tax fraud are “left at limbo,” Mica said, “and it doesn’t appear that IRS has a means of actually changing what’s going on.”
“They’ve made some attempts, but obviously, if you just look at the increases – the dramatic increases – whatever action the IRS appears to be taking is not working. We’ve gone again from 456,000 to almost 2 million cases,” Mica added.