Scams that target taxpayers for refund fraud or identity theft have grown more frequent in recent years, but Internal Revenue Service Commissioner John Koskinen said the federal agency has exponentially ramped up its investigative efforts to fight scammers.
Koskinen issued a warning about fraud during a visit Thursday to the IRS tax-return processing center on Butler Avenue in southeast Fresno. He is touring the 25 largest IRS facilities in the U.S. as he acquaints himself with the agency's operations. The Fresno center, which employs more than 3,700 people, is the 11th stop on his cross-country tour. Including the Butler Avenue site, the IRS has more than 6,500 people in nine offices in Fresno and Tulare counties.
Koskinen, 74, became the IRS commissioner in December, nominated by President Barack Obama to what some have called "the worst job in Washington, D.C." and confirmed by the U.S. Senate in the wake of controversy over the agency's scrutiny of conservative political organizations. He is a former chairman and acting CEO of Freddie Mac and had a long career in private industry, developing a reputation as an expert in turning around struggling companies.
As more people file tax returns electronically, one struggle confronting the IRS is an "explosion" in tax-refund fraud, "where people beg, borrow or steal a Social Security number and file a false return that shows they're owed a refund, and then get it," Koskinen said. When the legitimate taxpayer files his or her tax return, it gets kicked back because the agency shows another return with that Social Security number has already been filed. "We then have to figure out who the real taxpayer is and work with those taxpayers to make sure they get the appropriate return."
The IRS anticipates handling more than 150 million tax returns this year, "and when the dust settles, about 80% will be filed electronically," he added.
Koskinen said there are two main types of identity scams for which taxpayers need to be wary, but the basic safety rule is the same for each -- never share personal information such as a Social Security number with anyone online, over the phone or with a stranger at the door.
Some fraudsters use the telephone to call people and claim they're from the IRS, "either asking for information or requiring payments under threat or coercion," Koskinen said. And there are "phishing" expeditions in which unsolicited email messages link to a realistic-looking, but fake IRS website that asks visitors to enter their personal information.
In the case of phone calls, the IRS recommends asking for the caller's name and phone number, then hanging up and checking with the agency to see if it's a legitimate call. For the email messages, Koskinen said, "don't respond to them, and check with us before you do."
The commissioner said the agency has made a "quantum leap" in investigating scammers in the past couple of years. Last year the IRS conducted about 1,400 investigations into refund fraud, up from only about 200 investigations a couple of years ago. In that same period, recommendations for criminal indictments rose from about 150 to more than 1,000.
The agency won about 800 convictions last year, Koskinen added. "We're now sending a strong message that if you get caught -- and we're chasing you hard -- and you get convicted, the sentence is not just a month or two," he said. "People are going away for 10 to 20 years."
But Koskinen also touted a kinder, gentler IRS, at least when it comes to law-abiding taxpayers. He described the increasing automation of the agency's efforts to answer questions on its website, instructional videos on YouTube, and applications where taxpayers can track the progress of refunds or get copies of past tax returns.
"One of the things we're trying to get people to understand ... is that if you have a problem filing your return, we're going to work with you on that," he said. "We understand sometimes people face financial difficulties and it's hard for them to pay their taxes, and we're anxious to sit down and work with them."
For would-be tax cheats, however, it's a different story.
"It's important for people to worry that if you don't pay your taxes willingly, we're going to chase you down and we're going to be very unhappy about it," Koskinen said. "The people we're chasing to the ends of the earth are the people who consciously decide they're not going to pay their taxes."
In case of potential tax scams:
-- Taxpayers who believe they are at risk for identity theft can visit the IRS ID protection web page at http://www.irs.gov/uac/Identity-Protection, or call the IRS Identity Protection Specialized Unit at 800-908-4490.
-- Taxpayers who owe money and receive a suspicious or threatening phone call from someone purporting to be an IRS agent can call the IRS at (800) 829-1040 to speak with someone about a payment plan.
-- Taxpayers who know they owe no taxes or are due a refund who receive a suspicious or threatening phone call from someone claiming to be with the IRS can report the call to the Treasury Inspector General for Tax Administration at (800) 366-4484.
-- If you receive an unsolicited email that looks like it's from the IRS or a related agency, report it by forwarding the message to firstname.lastname@example.org.
The reporter can be reached at (559) 441-6319, email@example.com or @tsheehan on Twitter.