Criminal Investigation. Stolen Identity Refund Fraud (SIRF)

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Karen Williams
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1 Speaker s Bio: Bill Beckham has been employed with the Internal Revenue Service for 28 years. He began his career as a Revenue Officer in the Collection Division. In 2000 he became a Special Agent with Internal Revenue Service Criminal Investigation. In 2012, he added a collateral duty as the Identity Theft Coordinator for the Dallas Field Office. He has worked several types of investigation while employed with the IRS including tax evasion and money laundering and identity theft. He is a 1986 graduate from the University of Oklahoma with a bachelor s degree in Business Administration.

In 2000 he became a Special Agent with Internal Revenue Service Criminal Investigation.

2 Speaker s Bio: Stephanie Byrd has been employed with the Internal Revenue Service Criminal Investigation for 13 years. In 2014, she added a collateral duty as the back-up Identity Theft Coordinator for the Dallas Field Office. She has worked several types of investigation while employed with the IRS including tax evasion, money laundering and identity theft. She has been working identity theft investigations for 9 years. She is a 2002 graduate from the University of North Texas with a bachelor s degree in Criminal Justice.

She has worked several types of investigation while employed with the IRS including tax evasion, money laundering and identity

3 Criminal Investigation Stolen Identity Refund Fraud (SIRF)

4 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.

of the Internal Revenue Code and related financial crimes in a

5 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

of identity theft cases, known as Stolen Identity Refund Fraud (SIRF),

6 Tax Refund Identity Theft Occurs when someone uses your personal information without your permission to file a tax return.

7 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 - Pre-texting

Stolen Identities are obtained through various methods:

8 Current Trends in Identity Theft Refund Schemes perpetrated by prisoners Stolen dependants for additional credits (EITC & ACTC) Use of identity by prior year tax return preparer Use of identities of those not likely required to file a Federal tax return (OMM) Use of non-wage and withholding tax returns (i.e. Interest Income, Schedule D, Schedule C)

return preparer Use of identities of those not likely required to file a Federal tax

9 The Players Three General Groupings: ID Thieves Return Preparers Money People

10 ID Thieves Steal Personal Identifying Information (PII) generally from their employer, place of business, or purchase off the street. Sell PII to criminal cells. PII may be in the form of a business record or handwritten lists.

purchase off the street. Sell PII to criminal cells.

11 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: Prepaid Access (PPA) card; Treasury check; Direct deposit; and/or Refund Anticipation Loan (RAL).

Use PII to prepare returns and control how refunds will be received:

12 Money People Obtain the proceeds of the scheme. Can include people holding bank accounts (foreign students), apartment managers, checks cashers, and store owners. People withdrawing funds from ATMs using PPA cards.

students), apartment managers, checks cashers, and

13 Charges in SIRF Cases 18 U.S.C. 286/287 (False Claims) 18 U.S.C. 641 (Theft of gov t funds) 18 U.S.C (Access device fraud) 18 U.S.C (Wire fraud) 18 U.S.C (ID theft) 18 U.S.C. 1028A (Aggravated ID theft) 18 U.S.C. 371 (Conspiracy)

S.C. 1028 (ID theft) 18 U.S.C. 1028A (Aggravated ID theft) 18 U.

14 ID Thieves 18 U.S.C U.S.C. 1028A 18 U.S.C. 371

15 Return Preparers 18 U.S.C. 286/ U.S.C U.S.C U.S.C U.S.C. 1028A 18 U.S.C. 371

16 Money People 18 U.S.C U.S.C U.S.C U.S.C. 1028A 18 U.S.C. 371

17 DOJ-Tax Directive 144 To provide federal law enforcement officials with the ability to timely address SIRF cases, DOJ-Tax Division issued Directive 144 to streamline these investigations The directive, which was released on September 18, 2012, has provided additional measures for law enforcement in the efforts of combating this fraud IRS-Office of Chief Counsel, Criminal Tax is currently working with the DOJ - Tax Division on the creation of Directive 145, which will address the seizure and forfeiture aspects of stolen identity refund fraud

measures for law enforcement in the efforts of combating this fraud IRS-Office of Chief Counsel, Criminal Tax is currently working with

18 Details of Directive 144 DOJ-Tax Division gave explicit authority and power to the U.S. Attorney s Office to allow for the initiation of tax related Grand Jury investigations without DOJ approval (IRS-CI must be invited to each case) The U.S. Attorney s Office can also authorize arrests, issue complaints and seek seizure/forfeiture actions without DOJ approval when the investigation involves stolen identity refund fraud

19 CI Response to Directive 144 IRS-CI subsequently responded to this Directive by streamlining investigative and review processes to capitalize on these historic changes and will continue to move expeditiously on SIRF investigations Summary reports are now reviewed in a shorter timeframe and direct referrals are made to the U.S. Attorney s Office for prosecution

and will continue to move expeditiously on SIRF investigations Summary reports are now

20 Title 18 Seizure/Forfeiture Authority in Tax Cases Use of Title 18 forfeiture provisions are limited to egregious circumstances where: 1) Significant assets have been identified; 2) IRS civil collection methods cannot adequately protect the assets; and 3) Title 26 seizure/forfeiture provisions are not applicable.

have been identified; 2) IRS civil collection methods cannot adequately

21 DOJ Tax Directive 128 The Department of Justice Tax Division established Directive 128 to allow for the use of Title 18 Seizure and Forfeiture provisions when refund fraud schemes contained the following characteristics: The identities of non-existent individual; The identities of deceased individuals; or The identities of individuals which were stolen and used in the scheme without their knowledge

22 Detecting Refund Fraud CI has 4 Scheme Development Centers (SDCs) whose primary mission is detecting refund fraud The SDCs develop information on high loss refund crime schemes, support ongoing criminal prosecutions, and identify new and emerging areas of fraud CI has dedicated one SDC to the Identity Theft Clearinghouse (ITC) - This location processes and researches ID Theft leads received from the field

23 Partners in Law Enforcement SIRF schemes are commonly detected in one of three ways: 1. USPIS reports to CI dozens/hundreds of U.S. Treasury mail containing Treasury checks addressed to suspicious addresses 2. Local PD s make vehicle stops and find Treasury checks and/or tax documents not belonging to the vehicle occupants. 3. Informants

24 Common Options in Enforcement Actions Surveillance (including vehicle and cellular GPS tracking, pole cams, etc) Search Warrants Seizure Warrants Undercover activity Using cooperating runners, check cashers, and/or return preparers.

25 Partnering Federal CI currently participates on joint investigations and collaborates with other Federal Agencies during task force settings and interagency working groups CI provides updated guidance to other Federal Agencies as to the proper procedures for returning proceeds of stolen refund fraud to the Department of the Treasury

26 Partnering State/Local CI special agents throughout the country participate in at least 35 task forces and working groups with federal, state, and local law enforcement that target tax related identity theft crimes CI personnel also coordinate with these agencies in an effort to ensure that victims are aware of the steps they need to take to resolve their affected tax accounts IRS developed the Identity Theft Victim Disclosure Waiver Process

27 Partnering State/Local Tax Authorities IRS-CI has partnered with our State tax counterparts to establish procedures for sharing information and leveraging resources as it relates to tax matters The focus of the collaboration is on false/fraudulent refund claims and identity theft tax fraud Memorandums of Understanding (MOUs) have been finalized with the states of DE, NY and CA The MOUs establishes reciprocal information sharing opportunities and cooperative compliance efforts between the IRS and the associated state

28 Partnering - External Collaborating with banks, tax software developers, and other industries Engaged dialogue with organizations such as the Network Branded Pre-paid Card Association, the American Coalition of Taxpayer Rights, the BITS Financial Roundtable and major credit card processing companies

29 SIRF Point of Contact IRS-CI Special Agent William Beckham (817) IRS-CI Special Agent Stephanie Byrd (214) IRS-CI Supervisory Special Agent Stephen Walker (972)

Criminal Investigation

Criminal Investigation Stolen Identity Refund Fraud (SIRF) Nneka Sutherland Special Agent (267) 941 6281 Nneka.Sutherland@ci.irs.gov Joseph Carl Special Agent (267) 941 6117 Joseph.Carl@ci.irs.gov IRS