[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
IDENTITY THEFT AND TAX FRAUD: GROWING PROBLEMS FOR THE INTERNAL REVENUE
SERVICE
=======================================================================
HEARING
before the
SUBCOMMITTEE ON GOVERNMENT ORGANIZATION,
EFFICIENCY AND FINANCIAL MANAGEMENT
of the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
NOVEMBER 4, 2011
__________
Serial No. 112-96
__________
Printed for the use of the Committee on Oversight and Government Reform
Available via the World Wide Web: http://www.fdsys.gov
http://www.house.gov/reform
_____
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana ELIJAH E. CUMMINGS, Maryland,
JOHN L. MICA, Florida Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of
JIM JORDAN, Ohio Columbia
JASON CHAFFETZ, Utah DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee PETER WELCH, Vermont
JOE WALSH, Illinois JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania
Lawrence J. Brady, Staff Director
John D. Cuaderes, Deputy Staff Director
Robert Borden, General Counsel
Linda A. Good, Chief Clerk
David Rapallo, Minority Staff Director
Subcommittee on Government Organization, Efficiency and Financial
Management
TODD RUSSELL PLATTS, Pennsylvania, Chairman
CONNIE MACK, Florida, Vice Chairman EDOLPHUS TOWNS, New York, Ranking
JAMES LANKFORD, Oklahoma Minority Member
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
PAUL A. GOSAR, Arizona GERALD E. CONNOLLY, Virginia
FRANK C. GUINTA, New Hampshire ELEANOR HOLMES NORTON, District of
BLAKE FARENTHOLD, Texas Columbia
C O N T E N T S
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Page
Hearing held on November 4, 2011................................. 1
Statement of:
George, J. Russell, Treasury Inspector General for Tax
Administration; Steven T. Miller, Deputy Commissioner for
Services and Enforcement, Internal Revenue Service; and
Ronald A. Cimino, Deputy Assistant Attorney General for
Criminal Matters, Tax Division, U.S. Department of Justice. 12
Cimino, Ronald A......................................... 29
George, J. Russell....................................... 12
Miller, Steven T......................................... 41
Nugent, Hon. Richard B., a Representative in Congress from
the State of Florida....................................... 5
Letters, statements, etc., submitted for the record by:
Cimino, Ronald A., Deputy Assistant Attorney General for
Criminal Matters, Tax Division, U.S. Department of Justice,
prepared statement of...................................... 31
George, J. Russell, Treasury Inspector General for Tax
Administration, prepared statement of...................... 15
Miller, Steven T., Deputy Commissioner for Services and
Enforcement, Internal Revenue Service, prepared statement
of......................................................... 43
Nugent, Hon. Richard B., a Representative in Congress from
the State of Florida, prepared statement of................ 8
Towns, Hon. Edolphus, a Representative in Congress from the
State of New York, prepared statement of................... 4
IDENTITY THEFT AND TAX FRAUD: GROWING PROBLEMS FOR THE INTERNAL REVENUE
SERVICE
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FRIDAY, NOVEMBER 4, 2011
House of Representatives,
Subcommittee on Government Organization, Efficiency
and Financial Management,
Committee on Oversight and Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 9:30 a.m., in
room 2154, Rayburn House Office Building, Hon. Todd Platts
(chairman of the subcommittee) presiding.
Present: Representatives Platts, Towns, and Connolly.
Also present: Representative Nugent.
Staff present: Michael R. Bebeau, assistant clerk; Molly
Boyl, parliamentarian; Mark D. Marin, director of oversight;
Tegan Millspaw, research analyst; James Robertson, professional
staff member; Beverly Britton Fraser, minority counsel; Ashley
Etienne, minority director of communications; Jennifer Hoffman,
minority press secretary; and Adam Koshkin, minority staff
assistant.
Mr. Platts. The committee will come to order.
I appreciate everyone's attendance here today. I do
apologize with--I know I'm going to be challenged with
scheduling conflicts. I know on our side of the aisle a House
Republican Conference that was scheduled unfortunately for the
exact same time on the balanced budget amendment at the last
minute. But we are glad to have everyone's participation with
all of our witnesses.
Today's hearing is a continuation of the subcommittee's
examination of the serious problem of tax fraud across the
country. In June, this subcommittee held a hearing on tax fraud
perpetrated by identify theft. We heard testimony from three
witnesses who had their identities and tax returns stolen. This
hearing will address recent developments in tax fraud and
evaluate the government's efforts to identify and prevent
fraud.
Tax fraud is a rapidly growing problem, and identity theft
related fraud is particularly concerning. In order to steal
someone's tax return, all the perpetrator of this type of fraud
needs is a name and a Social Security number. This information
is then used to submit a fraudulent claim. If a victim has not
filed taxes yet, the criminal is even able to steal the
victim's tax return.
In 2008, the Internal Revenue Service identified over
50,000 cases of identity theft related fraud. In 2010, that
number had increased to approximately 248,000. Many cases go
undetected, and the actual number of identity theft tax fraud
could be much higher.
Identity thieves obtain personal information from many
sources, including doctors' offices, school systems, and human
resources departments. Some thieves get information from the
Social Security death index and file fraudulent claims under
the names of deceased individuals. In 2010, IRS paid over $12
million to people who were listed as deceased. Service members
who were killed in action defending this great Nation are often
targets of identity thieves who use their information to steal
tax returns from their families.
Tax credit fraud is another growing problem. The Treasury
Inspector General for Tax Administration found that in 2010 IRS
issued $4.2 billion in tax credits to individuals who were
unauthorized to work in the United States. IRS has not
recovered that money.
Additionally, TIGTA discovered that IRS improperly issued
approximately $3.2 billion in educational tax credits. Some of
those educational credits went to prisoners.
Although tax fraud is a serious crime, it is difficult to
investigate or prosecute the perpetrators of these crimes. All
potential cases are reviewed by the Department of Justice and
must be approved before IRS can investigate. IRS also has
limited resources to investigate criminal activity and rarely
investigates tax return fraud because the average amount per
return is $3,400.
While this is a small number, it can be devastating to the
victims who had their identities and tax returns stolen. It
also quickly adds up to millions of dollars of improper
payments each year that go to criminals.
IRS has been working to address the increasingly serious
problem of tax fraud, and it deserves credit for its efforts.
However, more must be done to address this issue.
Today, we will hear from our witnesses about the process of
investigating tax fraud and IRS's work with the Department of
Justice to prosecute the perpetrators of this fraud. We will
also learn about the work IRS and TIGTA are doing to better
identify and prevent fraud before it occurs.
I certainly thank our witnesses in advance for their
testimony here today and the written testimony they have
supplied, and I would emphasize that a lot of our focus here
today is going to be about protecting taxpayers' money so that
we don't lose money to this type of fraud.
But a very important aspect of our June hearing and again
today is the fact that this is how--we want to focus on how the
Federal Government is protecting American taxpayers against
these crimes and how we then assist the victims of these crimes
when they occur and that we not lose sight of the fact, you
know, that this is the real lives of American citizens, law-
abiding citizens, that are tremendously impacted when tax
identity fraud occurs.
With that, I'll yield to my distinguished colleague, the
ranking member of the subcommittee from New York, Mr. Towns.
Mr. Towns. Thank you very much, Mr. Chairman, for holding
this hearing on identity theft and tax fraud, growing problems,
of course, which we have been dealing with now for--this is the
second time, the second hearing.
In 2011 alone, the IRS has already identified over 582,000
taxpayers that were the subject of identity theft, and this is
more than double the incidence from only 3 years ago. Clearly,
we have to do a better job protecting the taxpayer and the
Treasury from criminals. Our witnesses today will help us
understand how this can be done.
One of the first priorities we must address is the quality
of assistance given to taxpayers victimized by employment or
tax refund fraud. The testimony does not paint a pretty picture
of how the IRS is handling this aspect of its responsibilities.
It is unacceptable to have innocent taxpayers waiting 12 to 18
months to verify their identity before a replacement refund
check is issued. We can and should do better.
Another obvious problem is what is being done to prevent
criminals from filing fraudulent tax returns using stolen
identification? I fully understand that identities are stolen,
traded, and misused in places far away from the IRS. It is also
clear that neither the IRS nor law enforcement nor anyone else
can predict when criminal behavior will occur or stopping
criminals bent on breaking the law. However, if there are
resources, both human and technological, to prevent criminals
from filing fraudulent returns, every effort should be made to
do so.
If the IRS, the Inspector General, or the Department of
Justice does not enforce the law against those who defraud the
Treasury and victimize taxpayers to identity theft, there will
be no deterrent or punishment for criminals.
I hear of budgetary limitations, staff limitations, a lack
of training programs, and legal limitations that prevent more
investigations and prosecution of these crimes. We cannot sit
back and do nothing because of limitations. The criminals are
becoming more sophisticated in defrauding the government. We
have to become more creative in our solutions. Because if they
find out that we cannot do anything about it, that means that
the numbers that we just talked about earlier will continue to
increase.
I look forward to the testimony today. I hope our witnesses
will guide us through the present limitations to working
solutions against the problem of identity theft and tax fraud.
And let me just say to all the witnesses that, you know, this
committee is not an ``I got you'' committee. You know, some of
the committees around here are the ``I got you'' committee, and
they want to get you.
But we're not here to do that. We want to be the ``help
you'' committee, to be able to make certain that people who are
having problems, that there is a solution to the problem within
a quick period of time and to prevent the problem from
continuing to grow.
So thank you very much.
Representative Nugent, good to see you here as well.
[The prepared statement of Hon. Edolphus Towns follows:]
Mr. Platts. The gentleman yields back.
And certainly I fully agree with the ranking member that
our purpose and assignment here is to partner with our
colleagues in the House, our colleagues throughout the Federal
Government on how we can well serve our fellow constituents,
our joint constituents, all Americans, and to get a good
result, not to play gotcha but to just work with you to get
good results.
We are honored to join with--not a member of our committee
but another colleague--a distinguished Member of our freshman
class here in Congress, Congressman Rich Nugent of Florida's
Fifth District.
Congressman, we're honored to have your testimony as one
who's seen the challenge of tax fraud firsthand in your
district. I know you're going to share that story with all of
our guests here today.
Mr. Nugent was sheriff of Hernando County, Florida, prior
to joining Congress so brings perspective not just as a Member
of the House but also as a long-time dedicated law enforcement
official.
So, Rich, we're delighted to have you here with us; and
you're recognized for a statement.
STATEMENT OF HON. RICHARD NUGENT, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF FLORIDA
Mr. Nugent. Thank you, Mr. Chairman.
First, I want to take just a moment to thank the
subcommittee and especially Chairman Platts and Ranking Member
Towns for the opportunity to speak here today.
Although tax fraud and identity theft is a nationwide
problem, I want to make the subcommittee aware of what's
happening in the Tampa Bay area in my district. Recently, Tampa
Bay--or Tampa Police Department started noticing that many of
their most notorious drug dealers were no longer on the street.
Officers pulled one of their previous dealers over during a
routine traffic stop and discovered massive amounts of prepared
debit cards, ledgers containing Social Security numbers, and
laptop computers in the back of the car.
Through this and similar routine traffic stops and drug
busts, Tampa Police Department discovered a scheme known as
Turbo Tax. One perpetrator had a ledger containing 100 names of
deceased people, and after the investigation it was discovered
that this man had made well over 1,000 false returns and
collected close to $2.4 million.
The Tampa Police Department worked well with the local IRS
agents and U.S. attorneys in their investigations. However,
once they went to the D.C. bureaucrats detailing exactly how
criminals steal the Social Security numbers, file the
fraudulent tax returns, and launder resulting money, the Feds
mostly turned a blind eye to that issue.
Tampa PD have explained how the criminals got Social
Security numbers. Initially, they targeted deceased people,
filing returns, information they found on Web sites, like
Ancestry.com. Once they ran out of dead folks, they started
stealing Social Security numbers from living victims. Tampa
Police Department has had cases where information was stolen
from nursing homes, schools, and hospitals. Additionally, James
Haley VA Medical Center sent letters to about 200 veterans
warning them that their identity had been stolen to file false
tax returns. The VA Inspector General is investigating this
case currently.
Tampa Police Department also knows how the criminals are
filing the their returns. The actual fraud is not committed by
an organized group but by individuals. Tampa Police Department
has busted what the lawbreakers call ``make it rain parties''
where criminals get together in a hotel room with Internet
access and file fake return after fake return.
Police know how the money's being laundered. The criminals
have worked out deals with unscrupulous business owners who
cash their checks or debit cards in exchange for a cut of the
money.
In Tampa, the most money seems to be laundered by a select
group of high-cash-flow businesses, including used car dealers
and clothing shops. One business alone received approximately
$3.5 million in Treasury money, our money.
How does Tampa Police Department know all this? The
criminals are telling them. Even after they have been read
their Miranda rights, the crooks are laying out their entire
process to the cops. They are freely admitting their crimes
because they don't think Federal officials would do anything
about it; and, unfortunately, it seems the criminals are right.
As a representative from GAO told the subcommittee in your
June hearing on this issue, IRS identified 248,357 incidents of
tax-related identity theft in 2010. However, the IRS Criminal
Investigative Division only had 4,706 active investigations
into all types of fraud.
The IRS and the Justice Department say that these cases
aren't of sufficient severity for them to look into.
Experiences in Tampa show the lack of action is not reflective
of the agents' desire across the ground to prosecute but the
bureaucracy within the IRS and their administrators.
Even more infuriating is the Federal agencies are notifying
the IRS of this fraud, but they continue to send checks. In
Tampa alone, the U.S. Postal Service stopped delivery of an
estimated $100 million in fraudulent refunds in a 6-month
period.
Media reports also say the company issuing of prepaid debit
cards notified the IRS of concerns. However, the IRS ignored
those warnings and just sent Treasury checks to those suspected
fraudsters.
I cannot understand how other government offices can be
telling the IRS that their checks are going to fraudsters and
yet the IRS continues to pump them out. Given our current
fiscal situation, it's unconscionable that the Federal
Government can be aware of billions of dollars in tax dollars
being stolen right out from under our noses and do very little
about it.
I'm here because I want to find a solution to the problem.
First, the IRS needs better controls to keep the fraudulent
returns from ever going out the door. Second, when identity
related fraud does occur, these criminals must be prosecuted,
and local law enforcement ought to be involved in the process.
Maybe the IRS doesn't want to increase anti-fraud
safeguards because it might slow down the return process, but I
think honest taxpayers would rather get the returns a few days
later and keep the money out of the hands of criminals and get
their tax return.
In closing, thank you again, Chairman Platts, for the
opportunity to testify this morning. I look forward to working
with both Federal and local officials, as well as my colleagues
in Congress, including the subcommittee, to bring an end to
this needless waste of taxpayer dollars.
[The prepared statement of Hon. Richard Nugent follows:]
Mr. Platts. Congressman Nugent, we certainly thank you for
your testimony and especially your personal insights into this
challenge that we're trying to deal with with the IRS both in
your district as well as your background in law enforcement.
You bring a great level of expertise to assist this
subcommittee in our efforts.
We're not just glad to have your testimony but ask
unanimous consent that Mr. Nugent will join us on the dais and
be part of the hearing for Q&A is as well.
Mr. Nugent. Thank you very much.
Mr. Platts. We will reset for our second panel and
certainly honored to have three distinguished witnesses with us
here today.
First, the Honorable J. Russell George, Treasury Inspector
General for Tax Administration. This is a little bit of a
homecoming for Mr. George as former staff director under a
distinguished, now passed on, chairman, Steve Horn of this very
subcommittee from, I think, the mid-'90's to about 2002.
Mr. George, we're delighted to have you back and have you
both as an alumnus of the subcommittee staff and also your
current work as Treasury Inspector General for Tax
Administration.
Also delighted to have Mr. Ron Cimino--I will try to make
sure I get that correct for you--Deputy Assistant Attorney
General for the Tax Division at the U.S. Department of Justice;
and the distinguished Steven Miller, Deputy Commissioner for
Enforcement at the Internal Revenue Service.
Now that you're all three seated, if I could ask you to
rise. The practice of the full and all of our subcommittees
here is to swear in our witnesses.
If you would raise your right hands.
[Witnesses sworn.]
Mr. Platts. Let the clerk reflect that the witnesses all
answered in the affirmative.
We are going to do our best to be efficient with your time.
It's our understanding that we're going to have votes on the
floor somewhere in the next half hour to 45 minutes, hopefully
closer to an hour; and our hope is we can get your oral
testimony here today. We have your written testimony and then
get to Q&A with members of the committee and not have you wait
too long, if at all, based on floor votes.
So if you can try to limit your testimony, written--your
oral testimony to 5 minutes and then allow us to get into a
good exchange as part of the Q&A.
So, Mr. George, if you would like to begin.
STATEMENTS OF J. RUSSELL GEORGE, TREASURY INSPECTOR GENERAL FOR
TAX ADMINISTRATION; STEVEN T. MILLER, DEPUTY COMMISSIONER FOR
SERVICES AND ENFORCEMENT, INTERNAL REVENUE SERVICE; AND RONALD
A. CIMINO, DEPUTY ASSISTANT ATTORNEY GENERAL FOR CRIMINAL
MATTERS, TAX DIVISION, U.S. DEPARTMENT OF JUSTICE
STATEMENT OF J. RUSSELL GEORGE
Mr. George. Thank you, Mr. Chairman--Chairman Platts,
Ranking Member Towns, Mr. Nugent. Thank you for the invitation
to testify on the issue of identity theft and tax refund and
tax fraud.
There are two primary types of identity theft that relate
to tax administration. The first involves an individual using
another person's name and/or Social Security number to file a
fraudulent tax return to generate a tax refund, which I will
refer to as a tax fraud identity theft. The second involves
using another person's identity, for example, the names, Social
Security number, or both, to obtain employment, which I will
refer to as employment-related identity theft.
In 2008, TIGTA recommended that the IRS develop and
implement a strategy to address both of these types of identity
theft. Since then, the number of tax-related identity theft
incidents has grown significantly.
Although the IRS acknowledges that it does not know the
exact number of open or closed identity theft cases, as of
August 31st of this year IRS incident tracking reports
indicated that the number of taxpayers affected by identity
theft has more than doubled since 2008 to over 580,000
taxpayers this year alone.
TIGTA is currently evaluating whether the IRS has
effectively provided assistance to victims of identity theft.
Our preliminary observations are that the IRS' processes are
not adequate to communicate identity theft procedures to
taxpayers. This results in increased burden for these victims.
We have analyzed recent identity theft cases and found that
the IRS' process for assisting victims is very lengthy. As was
pointed out earlier, a typical path for an identity theft
refund case that is not complex may take as long as 18 months
to resolve.
Standard IRS processes and organizational structure hinder
timely and effective case resolution. High telephone call
demand, limited resources, and a growing identity theft
inventory make it difficult for customer service assisters to
prioritize identity theft cases. The assisters who work the
majority of identity theft cases also work the IRS' toll-free
telephone number responding to telephone taxpayer inquiries.
Identity theft cases are not always a priority even though
an untimely case resolution could result in significant
taxpayer burden as well as an improper payment. Identity theft
case processing is highly decentralized, and coordination among
the IRS functions is limited.
Procedures pertaining to identity theft are not arranged
for efficient access. They are inconsistent and are scattered
throughout the Internal Revenue manual.
The different systems used by the various functions prevent
accurate tracking and reporting of identity theft workloads and
their effect on tax administration. There is no mechanism or
system in place to track cases in process or time spent working
cases.
Total time spent on a case can vary significantly, and
sometimes cases can stay open for months with little or no
activity as the assisters answer calls or work other types of
cases.
In fiscal year 2011, the IRS began issuing identity
protection Personal Identification Numbers, referred to as
PINs, to tax payers who have been previously identified by the
IRS as victims of identity theft. The PIN will indicate the
taxpayer provided the IRS with information that validates their
identity and that the IRS is satisfied the taxpayer is the
valid holder of the Social Security number.
Currently, the IRS provides the identity protection PINs
only to taxpayers who have been a victim of identity theft that
has affected the filing or processing of their Federal tax
return. The PIN is not available to taxpayers who claim to have
been a victim of identity theft but who have not had problems
filing their tax returns.
While the financial sector offers customers the option of
providing additional protection on their accounts, the IRS
should consider adopting such practices. Providing protection
only after the taxpayer has been victimized does not serve the
American taxpayer well.
A substantial number of unscrupulous taxpayers submit
fraudulent tax returns to the IRS for the sole purpose of
receiving a tax refund. From January 1st through September 10th
of this year, the IRS reported that it received over 1.6
million tax returns with more than $12 billion claimed in
fraudulent tax refunds, and yet it prevented the issuance of
$11.5 billion of that money.
Tax-related identity theft is a growing concern despite the
IRS' efforts to address this serious problem. It is critical
for the IRS to deter and detect identity theft before it occurs
within the tax return process. The IRS needs a better process
to identify and respond whenever identity theft fraud occurs.
While the IRS has undertaken important steps and
initiatives to prevent the occurrence of identity theft,
additional controls could minimize and prevent future
incidences.
Thank you, Mr. Chairman for the opportunity to present
testimony.
[The prepared statement of Mr. George follows:]
Mr. Platts. Thank you, Mr. George. Mr. Cimino.
Mr. Cimino. Mr. Chairman.
STATEMENT OF RONALD A. CIMINO
Mr. Cimino. Mr. Platts, Ranking Member Towns and members of
the subcommittee. Thank you for the opportunity to appear
before you this morning to discuss the Department of Justice's
efforts to combat tax refund fraud arising from identity theft.
The Department greatly appreciates the commitment that the
chairman, the subcommittee----
Mr. Platts. Please put your microphone on.
Mr. Cimino [continuing]. And staff have made to highlight
the serious crimes of identity theft and fraud.
The Department recognizes the critical need to address this
ever-growing problem of identity theft. Combating computer
theft, including identity theft, is one of the Department's top
priorities as set forth in the current strategic plan.
As the Attorney General has said, our core mission is to
pursue justice for criminal acts, and that pursuit includes
justice for victims of crime. In criminal matters involving
identity theft and Federal tax crimes, the IRS investigates
these matters and refers them to the Department.
Thereafter, the Tax Division supervises and directly
prosecutes some of these matters. The Tax Division prosecutors
work closely with assistant U.S. attorneys across the country
to develop and prosecute these tax refund crimes.
As part of that process, Federal prosecutors also ensure
that victims' rights are respected. These cases are prosecuted
by both the Tax Division prosecutors and assistant U.S.
attorneys, either separately or jointly.
This close working relationship enables the Department to
share knowledge and leverage our resources in order to combat
refund fraud across the country. While each prosecution may
only involve the single defendant or small group of defendants,
in the majority of cases the number of incidents and victims is
significantly greater.
Regardless of the number of victims or the amount of the
refund involved, the Department evaluates the merits of each
case to determine whether the crime can be proven beyond a
reasonable doubt. There are cases in various stages in which
the Department is investigating and prosecuting perpetrators of
identity theft and tax fraud. As described in my testimony, my
written testimony, there are statutory restrictions on my
ability to comment on the specific facts of these cases.
However, I can assure the subcommittee that the Department
continues to vigorously prosecute these cases to the fullest
extent of the law. While prevention and early detection are
always the first and best line of defense, the Department
recognizes that prosecution is also a critical tool when it
comes to combating identity theft and tax fraud.
As Deputy Commissioner Miller has stated in his testimony,
the IRS is committed to continuing to look for new and
innovative ways to detect and stop identity theft. The
Department is also committed to stopping identity theft. Our
mission to pursue justice can only be attained if victims
receive justice as well. While the Department will never be
able to fully eradicate crimes such as identity theft and tax
fraud, our persistence, dedication, and success in prosecuting
these cases sends a clear message to those who would engage in
such conduct that they will be found accountable for their
actions.
I would like to thank you, Mr. Chairman, for the
opportunity to appear this morning and I'm happy to take any
questions.
Mr. Platts. Thanks for your testimony.
[The prepared statement of Mr. Cimino follows:]
Mr. Platts. Commissioner Miller.
STATEMENT OF STEVEN T. MILLER
Mr. Miller. Good morning, Chairman Platts, Ranking Member
Towns, Mr. Nugent, I appreciate the opportunity to speak today.
Over the past few years, the IRS has seen a significant
increase in identity theft. Identity theft and the harm that it
inflicts is a problem that we are taking very seriously. At the
start, let me say quite plainly that the IRS is confronted with
the same challenges as every major financial institution in
preventing and detecting identity theft.
We cannot stop all identity theft. However, we are better
than we were, and we will get better still. We have to balance
the need to make payments in a timely manner with the need to
ensure that claims are proper and taxpayer rights are
protected.
Let me describe our current efforts in terms of fraud
prevention first and victim assistance after that. First, up-
front protection of fraud. In 2011, the IRS to date has
protected $1.3 billion in refunds from being erroneously sent
to identity thieves. And for 2012, the following is in place.
Despite a very tight budget, we are adding staff in this area.
New for 2012 is up-front screening filters that will
improve our ability to spot false returns before a refund is
issued. This includes a series of improvements for decedent
identity information.
For returns caught in these screens, new procedures are in
place. Before any refund, we will correspond with the sender.
We are issuing special identification numbers, the PINs, to
expedite filing for those taxpayers whose identities have been
stolen, and we are accelerating the matching of information
returns in order to have a better shot at stopping the fraud up
front.
There are new procedures to allow us to match returns to
lists of taxpayer information that law enforcement officials
believe may have been stolen. We will be doing that up front,
and we have improved collaboration with the software developers
and others to determine how we can better partner to prevent
theft.
In addition, the investigative work done by our Criminal
Investigation Division continues, and we will increase the
resources available and redouble our efforts to work with other
law enforcement in this area. That's our work on prevention.
We are also taking a number of actions to help victims of
identity theft. We are implementing new procedures and adding
staff to resolve cases faster and minimize the disruption to
innocent taxpayers. Newly formed special units will do this
work.
The PINs I spoke about earlier will assist the identity
theft victims in filing future returns. Next week we begin the
process of issuing more than 250,000 such PINs. We have also
updated training for our telephone representatives and
developed training for all other public-facing employees.
Outreach to the public will continue as well.
Let me conclude, our work here is critical. We see identity
theft as affecting the way people view our agency and, as
importantly, as eroding people's view of their obligation to
pay taxes. We cannot be lax in stopping fraud and we must
improve our treatment of victims.
I can't tell you that we're going to beat this problem 1
year, but I can say that our work in 2012 is a solid start and
not the end of our efforts. And obviously I'll be happy to
answer any questions.
Mr. Platts. Thank you, Commissioner Miller.
[The prepared statement of Mr. Miller follows:]
Mr. Platts. I yield myself 5 minutes to begin the
questioning and again thank each of you for your testimony as
we work jointly to try to address this growing problem and
better protect American taxpayers and to prevent American
citizens from being victimized.
And I want to start with the issue of how we are assisting
victims. And, Commissioner Miller, you and I have spoken about
this issue prior to this hearing as we did with the
Commissioner back in June, that we recognize we're talking
about criminal acts here and the victims of crime.
And I'd be interested I guess first, your response both
here today and in the written testimony of the Inspector
General, when they look at a typical way that a victim of
identity theft within IRS has been handled, where they first
learn of it in February, report it, and then work their way
through the Inspector General kind of references, what they see
based on their findings, a typical case where you know they--
the law-abiding citizen, when they go to file their return in
February and finds out somebody has already filed a return
under their name and Social Security number--that they work
through February, April, July, September, October November,
December and January as a typical response till that person's
case is resolved.
And my understanding of the standard procedure is that when
one of these cases come to light in February or March, that is
basically put into what's called a duplicate case filing system
and basically set aside until, at the earliest, sometime after
April 15th when the filing deadline hits.
That's not giving much priority to the victims of crime,
which is what we're talking about here.
So I guess, Mr. Miller, your response of how you assess the
Inspector General's review and, you know, what we are doing to
change that, because that's not an acceptable level of
response.
Mr. Miller. And I agree with the presentation that you have
just given. Let me break this up into about three pieces.
First, as to Mr. Russell's report, we have not seen his actual
report. The first we saw it was Wednesday night so it's hard
for us to exactly judge and deal with point by point.
But I will say, not our understanding, and we don't think
it's correct that the typical case--whereas as he used in his
written testimony, the best case is 18 months, we don't think
that's right. We're going to go back and we'll take a look.
But, you know, I am also going to say I'm quite sure it has
happened, right? I don't think it's typical. I know it's
happened.
Mr. Platts. When you take that look, if you could submit to
the committee for the record what you find is the typical
average response from the time that person says I've been that
victim and their case is resolved.
Mr. Miller. Be more than happy to do that.
[The information referred to follows:]
[Note.--The information referred to was not provided.]
Mr. Miller. The second piece that you talked about is is
this a priority for the service, and it's a tough answer. The
answer is that when it happens early in the year, that's when
the same people who are doing this work are doing phone work.
Is it a priority, is it a first priority? Yes. But the
question is, are we going to do phone work or are we going to
do these cases? We need to do a better job going forward of
doing both. That's a resource issue for us, to be blunt.
I think, I think probably in 2011 we did more phone and
less paper. I believe for 2012 with the resources that I've
made available we'll do more paper. There's still going to be
resource shortages. And while we will try to get to this work,
there's an awful lot of work that goes on during that
timeframe. We need to process returns.
We need to, you know, deposit checks. We need to answer the
phones. And our phone level of service is not something to wave
the flag about either at this point due to resources. We're
down to, you know, 7 out of 10 people getting through. And next
year, you know--this year, rather, in 2012, it's likely to go
down from that. So we have some tough choices to make up front.
But I will tell you we're going to do better this year. We've
made more resources available to work both of these things.
The final piece, and that really is the final piece, the
final piece is we are going to get better at this. And we are
putting in place units, specialized units in accounts
management, in submission processing, in the other places where
identity theft presents itself, in order to work these cases
quicker, to work them with folks that understand the processes
better. They will be trained; we will do a better job this
year.
Mr. Platts. And you reference in your testimony the
training that you're doing, which clearly is necessary.
Mr. Miller. Right, it is.
Mr. Platts. But it's also an organizational challenge
because I think you identified, what the Inspector General
identified, is that you have the individuals that are on the
front lines of the phones also being the one charged with
assisting victims. And so to meet the needs of the phone calls,
you're in essence setting the victims assistance aside--as the
Inspector General referenced, the duplicate function--so that
it's treated as just a duplicate case and not given a priority.
And I guess as I've shared with you previously and again
today, when it comes to a victim of a crime, we need to make
that a priority.
Mr. Miller. I understand.
Mr. Platts. And I don't think we're adequately doing that.
I think you understand the importance of that and the training
that you're doing. I commend you for that approach and--but I
think it is an organizational structural issue here that you
need to, you know, have a victims assistance unit that is not
worried about meeting their other obligations over here but is
focused specifically.
These are law-abiding citizens who are trying to comply
with, as we all know, a very complex code. We bear the blame
here in Congress for that, but they're trying to do their part,
and then they get victimized and we need to do a better job of
assisting them.
And a quick follow-up, and then I'll yield to the ranking
member. I know I'm over my time.
But if you assume that you were even close in the Inspector
General's findings, it's identified in February and it's the
following January or so until it's resolved, in this written
testimony there's also statements that they found that even
when the victim of the crime is being given notice that your
case is resolved, you're good, that it's anywhere from 2 or
more weeks till the payment, the refund, is actually provided.
So, you know, what's the delay there?
You've gone through 10, 11 months. They get a letter
saying, yep, we understand. We've gotten it straightened out,
but they still wait, you know--you know--in the statement it
says release of tax refunds can take from 2 to 12 weeks to
post. That's pretty outrageous, you know, that it's done but it
still takes us up to 3 months. So I don't know if that's an
issue that you've looked at yet, but we need to.
Mr. Miller. So I can come back with more information on
that, Mr. Chairman. But in my understanding it will take 2
weeks, probably, because we work in cycles. It might take,
depending on when it occurs in that 2 weeks, 4 weeks, never
really should take 12 weeks, and I need to take a look at what
TIGTA is looking at to work through that.
Mr. Platts. Right. But in your response there, I would
emphasize again, we need to prioritize assistance to the
victims, to not put them in the normal cycle. We're going to
issue checks in 2 weeks or 4 weeks or 6 weeks. Now these guys
have waited 11 months after being victimized. So I think we--
what I hope you'll look at is how do we prioritize these, not
just put them in the normal routine standard operating
procedure. But, no, they have already, you know, waited long
enough to simply get what they are owed, in essence, by us.
So I appreciate you taking those concerns back and
understand that you--I do not expect to have all the answers
here today, but that we--we are on the same page as far as
trying to do right by the victims.
With that I yield to the ranking member, Mr. Towns, for the
purpose of questions.
Mr. Towns. Thank you very much, Mr. Chairman.
Let me begin with you, Mr. Cimino. How many attorneys
currently work on tax fraud issues in the Department of Justice
across the United States?
Mr. Cimino. Congressman Towns, I can't--I can't respond the
number across the country, and I can get back with you with a
little more detailed information, but I can try to respond to
your question.
Within the Tax Division we have 100 or more prosecutors
solely devoted to tax fraud. Most of those positions are filled
by line attorneys who have two roles. One is to ensure that the
investigation that the Internal Revenue Service has conducted
and submitted to us is adequate for a successful prosecution.
And the second role is to actually prosecute those cases
across the country. We do that ourselves. We do that
cooperatively with the U.S. attorney's offices as co-counsel
with them, and a great bulk of the cases are actually handled
by the 94 U.S. attorney's offices' staff across the country.
Each year there's a certain number of cases forwarded to us
by the IRS, and we try to process them as quickly as we can to
move them on.
I hope that answers your question, sir.
Mr. Towns. Well, I guess you answered my question but I
guess what I'm really thinking about is, isn't it time for you
to start partnering with local law enforcement? Don't you think
we should do more of that?
Mr. Cimino. In response to your question, we----
Mr. Towns. I'm aware of section 6103.
Mr. Cimino. We do, in fact, have joint task forces with
local and State law enforcement working with task forces in the
various U.S. attorneys's offices. The State and local officials
are deputized under the U.S. Marshals program and work in a
cooperative spirit. This usually occurs in a grand jury
setting.
Mr. Towns. Let me ask you, do you have any information on
them, the conviction rate--in terms of the actual conviction
rate?
Mr. Cimino. In terms of all cases across the country that
are tax-related historically, and I have been with the
Department since 1973, it has always been higher than 90
percent; frequently 95, 96 or 97 percent of a conviction rate
for the charges of the crime.
Mr. Towns. You know, if you think that if we partnered more
with local law enforcement the number would go down--do you
think that would happen if we partnered more with local law
enforcement, would the number go down? Do you think that; or
would it remain basically the same?
Mr. Cimino. I can't, could not venture. I'm sure that our
local and State law enforcement are very effective prosecutors.
The problem, perhaps, Congressman, is that in partnering we
have to be prosecuting Federal crimes, and in that sense my
answer to you is no. I think almost every U.S. attorney
welcomes the assistance of those people who are deputized to
work in Federal task forces.
Mr. Towns. Let me just go to you, Mr. Miller. You indicated
that you think you would be able to do a whole lot better. You
know, are you getting additional resources?
Mr. Miller. No, sir. We have had to obviously carve out
another 400 or so people to make a dent in this work, which is
almost doubling the footprint that we have in this area for
identity theft.
Mr. Towns. You know, I'm concerned that, you know, when you
take from somewhere else, that something else happens.
Mr. Miller. Yes, sir.
Mr. Towns. You know, and that's my concern. So it seems to
me that we need to take a serious look and evaluate, maybe, and
listen to the testimony from Representative Nugent. Maybe we
need to increase the amount, you know, of investigators to be
able to--and we might be able to close part of the deficit.
Because I'm certain that if you would analyze, and bringing
more people on, and then going out and dealing with fraud and
abuse, I think that, who knows, that we might make a profit. It
might be an increase.
So I think that we need to look at the possibility of
getting more workers to stop what's going on because it seems
to me that they are under the impression that it's okay.
Because when you look at the fact that in 2008, 51,000 cases,
and in 2009, 169,000 cases, and in 2010, 248,000 cases, and
then in 2011 582,000 cases, and who knows what's going to be in
1912 and 1913.
Mr. Connolly. Would my colleague yield for an observation?
Mr. Towns. I would be delighted to.
Mr. Connolly. I couldn't agree with him more. Sadly, this
committee is headed in exactly the opposite direction. We
approved legislation yesterday that would guarantee at least a
10 percent reduction in this agency and all Federal agencies.
Mr. Towns. Well, you know what they say in my neighborhood
back in Brooklyn, New York, ``We'll hustle it backward.''
Mr. Chairman, you know, I think that--I know my time has
expired, so I'll yield back.
Mr. Platts. I thank the gentleman. And before I yield to
Mr. Nugent, I do appreciate the concern expressed about
legislation we moved yesterday, but I would emphasize that it's
a 10 percent reduction overall. And as we kind of just debated
in committee yesterday, meaning that we as a Congress and the
Federal Government needs to better prioritize, you know, what
are our most important responsibilities. So it doesn't mean
that this agency would go down by 10 percent. Maybe it's other
agencies that are less important or less important assignments.
So, overall employment would be 10 percent.
Mr. Towns. I think----
Mr. Platts. I would yield.
Mr. Towns. Mr. Chairman, undoubtedly you yield. Thank you.
I appreciate it. For a moment I thought I was chairman.
Mr. Platts. And the distinguished gentleman has been
chairman in the past, as have I. We keep swapping chairs.
Mr. Towns. Hold that thought. No, I would just say it seems
to me that we need to look at the possibility that bringing in
additional revenue is important, and maybe this is an agency
that should be increased. I mean, I think that's the point I'm
making and that if we increased it, who knows, because I think
that is one other thing that we're not examining here.
Some folks that are victims do not even report it. Because
when I look at them taking people from another place, then the
phone center, I mean people will then--can't get through, they
can't make--I mean, I'm concerned about that.
And then there's the other issue of how many people are
just ripped off and don't even report it, don't even talk about
it because of the fact that it's difficult to be able to get
through to the center. So there are those kinds of things.
I yield back, Mr. Chairman.
Mr. Platts. Reclaiming my time. And Mr. Towns references a
very important issue. We know that many of those whose
identities are stolen are individuals who would not need to
file a return. And so they, you know, don't know that a fraud's
been committed against them because they would not have
otherwise filed one. So the actual number of fraud cases,
because those individuals don't even know it, are not able to
help identify it and allow us to then prosecute the wrongdoer.
We do have votes up on the floor. My intent here is to get
to Mr. Nugent's questions and then Mr. Connolly, and then we
will have to take a brief recess, shoot over for votes, come
back and try not to have you waiting here any longer than you
have to.
So, Mr. Nugent, you are recognized for 5 minutes for
questions.
Mr. Connolly. Mr. Chairman, just on that, I'm probably
going to go and vote. So we'll reconvene after votes?
Mr. Platts. We will.
Mr. Connolly. Cool.
Mr. Nugent. Thank you, Mr. Chairman and the members of the
panel for being here today. You know, as a local law
enforcement official for so many years, we worked hand in hand
a lot of times with the U.S. attorney's office in adopting
cases that we worked, that turned out to be federally
prosecutable, and we would partner with DEA, FBI, ICE, to bring
that forward to the U.S. attorney's office.
And the difference in this scenario, though, is working
with the IRS. And it seems like we're--you know, when you talk
about leveraging resources, particularly where everybody,
everybody is cutting back, I think we're missing the boat as it
relates to tapping into that local law enforcement.
Just as in the city of Tampa--you know, not all the crooks
live in Tampa, and they're accounting for, you know, millions
and billions of dollars in tax fraud alone. And this is real
tax dollars, dollars that are already in the Treasury that are
now flowing back out.
So my question is, if you understand the code and
understand the U.S. regulation, is there a way to better
partner with more eyes on the ground to help you enforce? And I
would submit that to Mr. Cimino or Mr. George.
Mr. George. Why don't I start? The IRS has limitations
placed on it, as you made reference to, under the U.S. Code,
specifically title 26, section 6103, which severely limits the
type of information that the IRS can share.
Now, while it limits it, it doesn't restrict it. There are
certain circumstances, if someone's life is at threat or there
are other exigent circumstances, you know, with the permission
of the Department of Justice, the IRS can get permission to
work with State and local officials. But sometimes that is a
very cumbersome process. Sometimes it really, as you
acknowledge here in the Tampa instance, it just would be so
cumbersome that it just needs to be looked at closely, I think.
And that is, again, section 6103 needs to be looked at by
Congress in terms of whether 25, 30 years after Watergate, when
most of these restrictions were put up, whether those same
restrictions are necessary today.
Mr. Nugent. And particularly with, you know, the advent of
the Internet, because we're looking at mostly filings that
police law enforcement has coming across, you know, the e-
filings and the ability to raid the Treasury.
Mr. Cimino.
Mr. Cimino. I agree with you, I think there can be more
cooperation, Congressman.
Mr. Towns. Microphone, Mr. Cimino. Will you turn your mike
on.
Mr. Cimino. As I mentioned in response to an earlier
question, there is a procedure in place when there are Federal
grand juries involving widespread crime that local law
enforcement are deputized to work in the grand jury under the
direction and aegis of the U.S. attorney, but that is for
Federal crimes and we certainly can explore whether that can be
used more effectively in this area.
Mr. Nugent. Mr. George, you had mentioned that in looking
at the legislation to, I guess, to more massage that while
respecting taxpayer privacy, which is a huge concern for all of
us, but at the same time protecting the U.S. Treasury from
being raided. So you asked, or what you're saying is that we
absolutely need to look at how we can do, through legislation,
help from a law enforcement perspective to Mr. Cimino and the
U.S. attorney in the Tax Division.
Mr. George. Yes. And I should have actually, Mr. Nugent,
prefaced my earlier response by pointing out that the Secretary
of the Treasury has delegated tax policy to the Office of Tax
Policy, so I am not speaking on behalf of the Department in
terms of advocating, you know, substantive tax policy changes
in this area.
But the ironic part about 6103 is that even the alleged
cheater can be protected, because the IRS is unable to share,
unless certain circumstances exist, information about that
person's tax return.
So if you have two competing taxpayers, in the instance
we're discussing here, someone who has taken the persona of
another person, you know, until the IRS figures things out,
their hands are tied in many respects unless someone consents--
the taxpayer can always consent to the release of his or her
information. But there--this is a very cumbersome area, as I
said before, and it needs to be looked at again.
Mr. Nugent. And one last, just to follow up. As it relates
to the front end of this, obviously if you can shut the spigot
off it would obviously then, you know, reduce the burden on
investigators, reduce the burden on the U.S. attorney's office
and the courts. So I would suggest to you that we need to do
more specifically as it relates to shutting the spigot off in
regards to trying to--you know, we push out the returns as
quickly as possible.
But by the same token as the chair had mentioned, once it's
identified, the real taxpayer trying to get his return is
through a laborious process to get there. So I would suggest or
recommend that the IRS really come back with a plan to Congress
and particularly to this committee as to how you're going to do
that.
Thank you, Mr. Chair. I yield back.
Mr. Platts. The gentleman yields back. We're going to try
to get a few more questions in before running over for the
votes. I think, Mr. Towns, you're going to head over.
Mr. Towns. Yes.
Mr. Platts. I'll take another round, and then I know Mr.
Connolly is coming back and Mr. Towns.
I want to follow up, Mr. George, when you were just talking
about the challenges that Mr. Nugent raised, and as you
referenced, that even the perpetrator of the crime then has to
give permission for anything related to their conduct in
committing that crime is still protected.
Is that a possible amendment to the existing law where, you
know, we're balancing privacy issues here? But once the IRS is
able to certify, yes, this person, the lawful citizen who finds
out in February, hey, somebody already filed. They come in,
they present all the documentation, Social Security card, other
ID, whatever they need to do in the affidavit, establishing
that I am the legitimate John Smith. And that has been
established and the IRS is able to confirm that and certify
that yes, you are, that would then trigger within the law that
the information of the perpetrator of the identity theft is no
longer protected and does not have to give permission.
Is that a way of trying to get to the issue, you know,
where that--the information could be shared to make it easier
to prosecute?
Mr. George. The short answer is yes, once this process is
played out. But it's during the course of it that it's really,
you know, sometimes really nonsensical or counterintuitive.
Mr. Platts. And it would need, as we talked earlier,
Commissioner, to really expedite that process of who is, you
know, the lawful taxpayer here, the sooner the better as far as
then trying to go after the wrongdoer.
Mr. George. But that ties into the overall complexity of
the process that you made reference to when you were addressing
Mr. Miller earlier. There's no question that it's very complex
and cumbersome for the average taxpayer in this predicament to
get this matter to the point where that determination is made.
And so the IRS, they literally have about 16 different
divisions within them that handle these types of cases and
these types of allegations.
They need a more unified process in place to do this more
efficiently and effectively.
Mr. Platts. And that goes to Commissioner Miller, the
issue, the structure, the organizational structure that, in
prioritizing assistance to the victims, that if we do that
better and centralize that, we also then maybe help centralize
this whole matter, you know, challenge so that we can better go
after, you know, the perpetrator of the crimes.
Mr. Platts. The issue of prosecution--and Mr. Nugent shared
the amazing story of Tampa and the $100 million plus, you know,
the dollar amounts, but my understanding is the average tax
fraud is about $3,400.
I guess, Mr. Cimino and Mr. George, on your understanding,
or maybe specifically from Department of Justice in pursuing--
we understand you are looking at those cases where it is $5
million, or $10 million or $100 million--what is the likelihood
of that person who files five cases averaging $3,500 of the
Department of Justice saying we're going to go after them as
well?
Mr. Cimino. Chairman Platts, there's no one factor that
goes into the prosecutorial decision of whether we will or will
not prosecute.
We look to all factors and I can assure you if, even if
there were a single false return, if the circumstances justify
it, we would look at it to see if it warranted prosecution.
Mr. Platts. Mr. George, do the numbers show that, that we
are prosecuting, you know, those. Because the way, the way I
read all the testimony in our June hearing that, you know, if
it's $3,400 or $4,000, $5,000, the reality is we don't go after
those, and the bad guys know that. So they feel free to
continue to engage in this unlawful conduct because they know
we're not going to pursue it.
Mr. George.
Mr. George. You know, while I am not the Inspector General
of the Department of Justice, anecdotally, not only in the text
context, it's just overall, DOJ has to make choices because of
the limited resources that they have. And I'm not in a position
to say what the threshold is for prosecuting particular cases.
Mr. Cimino may be in a position to respond to that. There's no
question that the lower the dollar amount, the less likely
they're going to expend a lot of resources.
Mr. Platts. And that's my understanding of the data as
well.
Mr. Cimino. If I can further respond, Congressman Platts.
Almost all cases that we see at the Tax Division that the IRS
has investigated have multiple claims for refund and frequently
multiple defendants acting in a conspiracy.
I think the three cases that I included in my testimony,
those that were Mr. Miller's, and probably across every U.S.
attorney's Web page reflects that and, you know, there's the
reality of our work. What I was trying to respond to, is there
a situation where a small dollar case would be prosecuted? And
that's what I was trying to refer to.
Mr. Platts. Yes. And this one really goes to Mr. Nugent,
about partnering in the law enforcement community and finding a
way to allow that partnering, and I would say incentivize it
maybe it's where--I know we do it in some areas of prosecution
of drug cases where there's a financial incentive, you know,
for the locals to partner with the Federal officials in the
recovery of the dollars, and maybe that's the way to do it.
Commissioner Miller, the cases that go to Justice really
have to first be identified by IRS saying we want Justice to
help. Your Criminal Investigation Division really makes that
first determination. Is that really accurate?
Mr. Miller. I think it is, I think it is. But there are
constant conversations going on between the Department of
Justice and the IRS about what we--what we would do.
If I could, if I could, Mr. Nugent, we do partner with
locals. What happened in Tampa is what happened in Tampa.
But I will say we have more than 20 task forces going on as
we speak today. We have 32 investigations in Tampa, and we have
spent in 2011, 225,000-plus hours on identity theft.
So I don't want, I don't want the committee to think that
we're doing nothing here. We really are. We might have had a
foot fault in Tampa, admittedly, and we are doing better in
Tampa and we are taking steps to get better in Tampa. We're
also taking steps to get better on the front end. With the type
of things that we saw in Tampa, I hope won't happen in 2012
with what we put in place.
Mr. Platts. That might be a good place to break.
Mr. Nugent, did you have another comment.
Mr. Nugent. Well, just to go back to that, and let me set
the record straight as it relates to the IRS agents, criminal
investigators in Tampa, nothing but the highest praise for the
individual investigators.
The problem came in regards to when Tampa identified
specific cases, that that's where it broke down. And the
ability that Mr. George talked about in trying to prosecute
cases to--particularly when they identify not only those that,
you know, profit from it, but also where they were money-
laundering the cards and the T checks directly, and that's
where they ran into a brick wall.
And the frustration on the local law enforcement level is
that while we work really well with the U.S. attorney's office
and other portions of Justice, that's just not the case as it
relates to IRS, not the agents in the field but the bureaucracy
that they're working under. And so as times change, that's why
I think we're having these hearings, that we've got to get past
how we used to do it and figure out how we're going to do it,
particularly with the advent of computers. And we watch the bad
guys; they morph faster than we can.
Mr. Miller. Agreed.
Mr. Nugent. And so I think that's where we need to move
forward as a committee but also as a Congress.
Mr. Platts. Certainly, Mr. Nugent, I look forward to
working with you on the issue of what legislative changes we
need to look at and giving more authority and power.
Mr. Nugent. Thank you for allowing me to sit up on the dais
with you and allowing me to testify in front of you.
Mr. Platts. Well, we're glad to have you and, again, your
knowledge as it relates to your district really gives us a good
working knowledge of how to better protect what happened in
Tampa not happening again. And, again, we do look forward to
working with you.
We are going to recess to the call of the chair. We've got
two votes, so hopefully we'll be over and back in about 10 to
15 minutes max. We are going to be limited, you know, when we
come back again, but we'll try to wrap up in that next session
because there will be another round, actually several rounds,
and we don't want you sitting all day waiting for us.
But I know Mr. Connolly is coming back, Mr. Towns. I know
when I come back to get to a little bit what we started on,
which is the preventive efforts up front, so we don't have to
worry about assisting victims if we can prevent them from being
victims. And so I think that's where we will pick up when we
come back.
So this hearing stands adjourned--I'm sorry, recessed to
the call of the chair.
[Recess.]
Mr. Platts. The hearing stands reconvened. I appreciate our
witnesses and everyone's patience while we--got my exercise for
the day running over and back.
So as I referenced before we recessed, I want to get into
some of the efforts of prevention. And, Commissioner Miller,
one of those issues is--regards the issue of e-filing and the
impact that it's had in a wonderful way as one who does e-file
myself, that expedited refund process. And I think most
Americans are glad to get their money back that they're
entitled to as quickly as possible, but it also seems to
correlate with the numbers that we see in increased level of
fraud, if you'll look at the kind of timing of e-file and it's
has been promoted in greater and greater fashion, and then the
fraudulent case numbers.
And in the Inspector General's testimony there's reference
to what you have to do to be able to e-file and reference to
the information that has to be provided, and one of those
issues was your prior year's adjusted gross income.
And, Commissioner if you could address that issue. What
actually is required to e-file besides name and Social Security
number, if anything, and, you know, why don't we require
additional information to make sure we're guarding against
fraud?
Mr. Miller. So we do, as you mentioned, Mr. Chairman, we do
require sort of an electronic signature, and that requires you
to have your adjusted gross income from the last year as one of
the items. And there are a handful of other items. But it is
name, Social and the AGI is that--is one of the shared secrets,
along with filing status for last year, I believe. There may be
one other that I can get back to you on, but those are the
types of things we use today as the electronic signature for
the electronic--and a natural question that you raised in our
prior discussion was why shouldn't we make that more generally
applicable and why doesn't that work to block much of this?
And it does work, I'm quite sure, in many areas. Where it
would not work is where there's been no filing requirement in
the prior year because there the AGI is zero. And so that is an
easy way to go through that system and sign and move through.
And we should work, as we've talked about, we should work to
see what we can do better in those circumstances.
Mr. Platts. And you touch on the one issue, which is the
fraud that's committed against those who don't have to file
because their AGI is beneath the threshold, and so they only
know they are victims of identity theft in--regarding tax
fraud.
Is the AGI required for every electronic filing?
Mr. Miller. I believe it's the manner of how to--how to
sign your return. There is--if you have forgotten it, if you
don't have it--there's an alternative method to get a different
PIN. And if I'm wrong on that, Mr. Chairman, I will come back
to you. But there is an alternative if you don't have your AGI.
There is a PIN, a way to go online and get a PIN with some
shared secrets there as well.
Mr. Platts. And, Mr. George, is that what you're
referencing in your testimony, because you say, ``which can
include names, Social Security number, date of birth, prior
year's adjusted gross income.''
Mr. George. That's correct. Mr. Miller is correct. There is
that alternative way in the event you don't have your AGI.
Mr. Platts. So can you walk me through the specifics of
what the alternative is, because to me if you have to have your
adjusted gross income from the prior year, that's a reasonable
requirement to file. And if we're going to make, you know, an
alternative to that, I guess I'm not aware of what that
alternative process is.
Mr. Miller. So my understanding, Mr. Chairman, is that you
can go online and you would basically have many of those same
things, which is name, address, Social Security number, I
believe filing status and, again, date of birth as well. And
you can get a PIN mailed to you, and that's the process right
now. And we ought to look at it to see whether it's everything
it ought to be.
Mr. Platts. I'd be concerned, if you can follow up with the
committee, what the specific requirements are for that
alternative electronic signature. Because if it is basically
the same information that you have to provide anyways--name,
Social Security, date of birth, not something additional--it's
adding a step that you go through something.
But, you know, hopefully there is additional information
and I'm not sure if it's, you know, logical that we want to
allow to file electronically if you can't document--and if it's
zero--zero because you didn't file the previous year, but as a
way--what I'm looking for is what are some filters up front to
knock out the ability, you know, for these individuals to file
electronically.
And a follow-on to this is my understanding is well over
half the ID theft, fraud cases, are in January in a typical
year; am I correct in that understanding?
Mr. Miller. I would have to go back and verify that. I
think it's front-loaded but I don't know that it's half. It is
occurring throughout the year at this point.
I was just informed by staff that your statement is
accurate, Mr. Platts, mostly January.
Mr. Platts. And, again, my review of the data--and I don't
have all the information that the IRS itself has, but is that
more than half are in January. And I think there's a reason for
that. The perpetrators of the crime know they won't get their
W-2s until the end of the month, or even the first week of
February, so they're getting their return in first before the
lawful citizen.
So that gets to kind of the follow-on, in addition to the
adjusted gross income, that my hope is that the IRS is looking
at how to further or enhance your scrutiny the earlier return
is submitted.
Mr. Miller. We are trying to move up our review of
information returns we're getting, including the W-2. And we're
putting in place some filters to try to drop out more returns
that look like they are identity theft.
Mr. Platts. And I appreciate the sensitivity of what your
filters are. We don't want to talk about that here in open--if
that can be provided to the committee.
Mr. Miller. Happy to do that.
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Mr. Platts. Because looking at the W-2s, if it's
fraudulent, you're not going to get any. So expediting that
review is not going to help because the criminal is not going
to send you any W-2s because they don't have them. So the
more--the tighter your filters are and the more kind of flags
that go up, new address, new bank account, those types of
things.
Can we also talk about, then, the IG's testimony. There was
the issue about Social Security death index and a better use of
that. And is there additional statutory authority that the IRS
needs to better access that information, or it's just how
you're currently accessing it to guard against deceased
individuals being used, names and IDs of deceased individuals
being used to file current returns?
Mr. Miller. So we have a new sort of approach to deceased
identities, and we have locked a bunch of accounts at this
point and, again, we'll go into much more detail. But in
general we have locked a great number of accounts that don't
have a filing status, we believe.
There were some decedents who have a filing status there,
in 2010 and 2011, for example, they would have a filing, a last
return. And those we've built new filters to take a look at up
front and intend to take a hard view on.
The Social Security list of those who have passed, it is an
issue for us. We are getting it, we are matching it and we'll
do a better job of that going forward. Ultimately we would, you
know, we would love if Social Security did not--or had a
different manner of posting it, but they are constrained by law
and by lawsuit as to what they can do there.
Mr. Platts. And related to that, the Social Security Act
limits your access to the Department of Health and Human
Services data base or national repository of wage and
employment information?
Mr. Miller. That's the--I believe what we are referring to
there, the new hire date, so-called new hire data base. We
actually do use it in some of our work today. We are permitted
by law to use it in some fashion and we would be more than
willing to walk through that with you as well, and what we
might need in terms of additional authority or resources.
Mr. Platts. If we're talking about the same thing, Mr.
George, correct me if I am wrong, that the use is just related
to the earned income tax credit.
Mr. Miller. Right now it is.
Mr. George. That's correct. They have the ability to do
that, but you touched on a very important point, Mr. Chairman.
If they were given expanded access to an HHS data base, this
would help address whether or not someone had wages that they
could then cite early to try to prevent a legitimate taxpayer
later on from claiming their legitimate return. So they do need
expanded authority in that area.
Mr. Platts. Commissioner, that's a perfect example of how,
in reference to Mr. Towns' opening statement, how we want to
partner with you, with the IRS, with the IG, with Justice, you
know, in identifying; because I want to emphasize, I know
there's a very, very good faith effort being made by you, by
the Commissioner, to combat this challenge and some of its
resources, some of its authority.
But, you know, where you need additional resources or a
reallocation of your resources, additional authority, we need
to hear that. And so we welcome that feedback of how we can
partner with you, and this gets us specifically with statutory
authority to allow you to have that information that allows you
to better, up front, prevent the fraud from occurring.
Mr. Miller. And we welcome that discussion.
Mr. Platts. I yield to the gentleman from Virginia, Mr.
Connolly, for the purpose of questions.
Mr. Connolly. I thank the chairman, and welcome. Mr.
Cimino, by the way, from New England?
Mr. Cimino. No, I'm from--excuse me, Congressman I'm
actually from Pittsburgh, sir.
Mr. Connolly. Okay, fully rounded Os. Good for you.
We've looked at, as Mr. Towns indicated, an almost
exponential increase in the number of identity thefts related
to tax administration: 51,000 in 2008, only 3 years ago; 10
times that number today, 582,000 in 3 years. That can only be
described as exponential growth.
And, Mr. Miller, if I understood you correctly, previously
you indicated you had to transfer about 400 people to try to
deal with that; is that right?
Mr. Miller. We have, yes.
Mr. Connolly. Pardon me?
Mr. Miller. We have; yes, sir.
Mr. Connolly. And those are--have you hired new people to
handle this problem?
Mr. Miller. Right now we are going at risk budget-wise for
those individuals.
Mr. Connolly. I can't hear you.
Mr. Miller. I'm sorry. Right now we are going at risk. I'm
not sure how we're going to pay for those, but we'll find a
way.
Mr. Connolly. Okay.
Let me ask a question maybe to Mr. Cimino, but any of you:
Is there sort of a back-of-the-envelope rule of thumb that for
every new IRS person or agent we hire, X amount of revenue goes
with that person? If we, the Congress, make an investment in
the IRS in terms of personnel, what kind of return on that
investment can we expect? I mean, if I--you know, it's not the
same at HUD. But at IRS there's a certain expectation it
enhances revenue.
Mr. Miller. I think, sir, the question is better answered
by me. But I think that--I don't know the exact number but it's
a multiple of--it's a positive investment for the Federal----
Mr. Connolly. Absolutely. Would you get back to the record
for us?
Mr. Miller. We will.
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Mr. Connolly. And we understand it's not a hard and fast
rule but it's a sort of, as I said, back-of-the-envelope
calculation that every dollar you put in, you reap $1.75 back,
whatever it is.
We had a little discussion before and the chairman is right
that the legislation--not his view, mine--ill-advised
legislation we adopted yesterday was a novel management
principle, that by freezing and capping personnel in any
enterprise, somehow that's a good thing.
I have yet to find a single corporation in America that
would agree with that, that just arbitrarily saying we are
going to cut back 10 percent and stay there.
And if you want to replace anybody, irrespective of
criticality of mission, you know, it's going to be on a one-to-
three ratio. And the disruption to missions, you know, so be
it. Now it is true, as the chairman indicated, that that's a
global number, but it's also naive to believe that wouldn't
affect IRS. IRS is hardly the favorite agency of the majority
in this Congress.
So I doubt very much that you're going to get a carveout.
Yesterday when there were amendments, we refused to have a
carveout for veterans. We refused to have a carveout for, you
know, criminal prosecutions and public safety activities. So
why we would have a carveout for IRS, I don't know.
But let's just posit theoretically that the impact of that
legislation were to become law on IRS. So let's say, by
attrition, over the next 3 years by the way, you lose 10
percent of your current work force, what would be the impact on
identity theft if you had to--not only you are looking at, Mr.
Miller, trying to find 400 people to serve this exponential
growth problem, but now on top of that, how about a 10 percent
reduction?
And it could be worse. What the chairman says is absolutely
correct but the obverse is also true. You might have to take a
bigger cut because some other agencies are considered
priorities, and they don't--there are not sustaining the 10
percent cut.
Mr. Miller. I guess it's a difficult--it's a difficult
question to answer.
Mr. Connolly. No, you have to answer it. We passed this
bill yesterday, so you have to start thinking about how would I
implement such a bill which could have, under worst-case
scenario, a 10 percent reduction in the work force.
Mr. Platts. Would the gentleman yield?
Mr. Connolly. Yes.
Mr. Platts. I would like to add one clarifying aspect about
the bill is that it does provide the CEO, the President, the
waiver authority for the efficient operation of any agency or
for critical missions of an agency to exceed that cap, so it
does allow--so if the President thought the IRS needed
additional, I just wanted to note that that was part of the
language of the bill.
Mr. Connolly. And I thank the chairman for that
clarification, and he is correct.
However, I would point out that that is an extraordinary
waiver. In other words, we don't go to the IRS administrator to
make a judgment; we go all the way to the President of the
United States in the White House.
Good luck, Mr. Miller, in getting a waiver from the White
House for your operation. You know, ``We need 10 extra people,
Mr. President. Will you sign a waiver so we'll get around this
provision in this law?''
I think that's an extraordinarily high level and I think,
frankly, it doesn't really solve micro-problems like the one
we're dealing with here, even though they're growing
exponentially.
Mr. Chairman, I know my time has expired, but I wonder if
you would just allow the witness to answer the question and
then I will be done. Thank you.
Mr. Miller. So I--obviously a 10 percent cut would be a
material reduction in our force and that's happening already,
by the way. Over----
Mr. Connolly. Mr. Miller, time is limited. Of course,
that's true. That's self-evidently true.
My question is: What does this do to your mission given the
fact that we've had a 10fold increase in 3 years in identity
theft with respect to tax administration that you are trying to
deal with? If we have a 10 percent reduction in the work force,
how would that affect your ability to deal with this
exponentially growing problem?
Mr. Miller. We will have to decide where we take those
cuts, Congressman, and I don't know whether they will be--but
we will have to take cuts, yes.
Mr. Connolly. And presumably that would impair your ability
to respond to this growing theft.
Mr. Miller. It will force some very tough choices, no
question about that.
Mr. Connolly. Thank you very much. Thank you, Mr. Chairman.
Mr. Platts. The gentleman yields back. And we do have a
difference of opinion what the bill means. As one that believes
we--Congress and the President--need to better prioritize where
we put our resources, and enforcing our tax laws is one of
those priorities. But I respect the gentleman's opinion.
But I think the gentleman started to say that you've had a
reduction.
Mr. Miller. Right.
Mr. Platts. And I would hazard a guess that that's related
to advances in technology in the last, say, 10 years; that
because of technology and computers, a lot of what we do today,
and when we are talking about filters, is not manual review but
electronic review of data.
Mr. Miller. Well, yes and no, Mr. Chairman, because
taxpayer rights are such that I can't just look at a return on
the computer and say it's a bad return. There's always a
treatment stream after that that involves a person.
Mr. Platts. Absolutely. But that initial review maybe is
done electronically as opposed to manpower.
Mr. Miller. Most of it is electronic at this point, some of
it is manpower. But certainly the back end of it is, once you
find you have to do something with it, as we talked about with
the victims and everyone else, it needs to be worked to ground
by people.
Mr. Platts. Absolutely. I appreciate that, especially when
you get into that type of detail.
I yield to the ranking member, Mr. Towns.
Mr. Towns. Mr. Chairman, we have a vote on, so I am going
to not ask my questions be answered at this point but to ask
them to respond to us in writing, if that's okay with you.
IRS can't give information, even to States or local law
enforcement, that may be investigating or prosecuting identity
theft crime under a State criminal statute. Each of the offices
represented today has to deal with this law. So if I could get
you to respond to these questions in writing for me, I would
appreciate it.
My question is: Why is this law that was enacted to deal
with crime 40 years ago, still preventing the prosecution of
new escalating criminal schemes?
Number two, what would be an appropriate legislative
response to certain sections of 6103 provisions that can enable
you to do your job of stopping these crimes more effectively?
Number three, have there been proposals from any of your
offices on adjusting section 6103 to meet the needs of your
agencies in combating identity theft crimes?
And the last one: What consequences, both negative and
positive, would such a legislative remedy have?
I would appreciate that. And being my voting record is not
the strongest, I need to go make this vote, Mr. Chairman.
Mr. Platts. The gentleman yields back.
I am going to try to wrap up with three main areas here and
then we will conclude the hearing, and appreciate the
additional information that will be provided in in writing.
The first is on the issue of the reference of $4.2 billion
in fraudulent child tax credits. And it's my understanding that
the IG is identifying those as paid to individuals here
illegally; is that correct, Mr. George?
Mr. George. Well, I would say paid to people who use I-
10's, not Social Security numbers, and our research has
indicated that most people who use the I-10 are not in the
country legally.
Mr. Platts. Okay. So a high propensity of these are likely
here illegally.
Mr. George. That's a reasonable conclusion.
Mr. Platts. And my understanding from your written
testimony is that of that $4.2 billion number that you have
identified, that to your belief, that none of that has been
recovered?
Mr. George. Yes, that's correct, sir.
Mr. Platts. Commissioner Miller, anything you can share on
efforts--and we're talking about not even millions now, but
billions of dollars of fraudulent payments, taxpayerfunds, have
gone out to likely illegals; and obviously, you know, there's
individuals who intentionally, you know, are violating the law
to seek that money. But is there an ongoing effort to recover
it and, if so, what success are we having?
Mr. Miller. So I think I would--we will get back to you
more fully in writing.
I don't think we agree with the number, to start with. We
don't agree that it's all fraud, and we do have an enforcement
effort underway. I don't want to say that either. We are
working on--because some of it is fraud, there's no question.
Some of it is mismatching.
And by the way, when you talk about I-10 holders, that
would be a change of law that you all in Congress would have to
make because that's not a barrier to getting the credit. So
it's a more complex sort of answer that I'm more than willing
to come back in in much more detail on.
Mr. Platts. And if you can give us--why do you disagree
with the number, you know? I'm glad if you want to do it in
writing.
Mr. Miller. Yes, we'll do that in writing.
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Mr. Platts. But what do you find inaccurate in what the
IG's finding is? And then, specifically, you referenced
something that we would have to do to prohibit somebody here
illegally, if there's something we're missing in the law,
because it's certainly not the intent of Congress and my belief
and certainly not what I think should be our intent--should not
be our intent that--if you're here illegally, that you get the
benefit of a tax credit from the general Treasury. So if
there's something that we should look at as far as, again, a
statutory change, I would welcome that suggestion, that
recommendation.
Mr. Miller. Absolutely.
Mr. Platts. The issue of the number of tax refunds that are
deposited in the same bank account, again in the IG's testimony
referenced in 2008, the IG reported that IRS had not yet
developed a process to ensure that more than 61 million tax
refunds were deposited to an account in the name of the actual
filer, as required by Federal direct deposit regulations. And
an analysis of the direct deposit data for 2007 showed that
more than 700,000 bank accounts received three or more tax
refunds totaling $8 billion.
I can think of times where more than one account, a family,
and perhaps a teenager working, or somebody doesn't have a bank
account--although today I would encourage they should; as I
referenced to you yesterday, both of my sons, 15 and 12, have
their own bank accounts--but where there could be instances.
But are we, you know, being dutiful here in identifying if
one bank account is getting 10 or 20 or 30 accounts a day
that's, again, to me, a huge red flag that should go up that
there's something askew here.
What, if anything, are we doing to better address this
issue that the IG raises in their testimony?
Mr. Miller. So, a couple of things. And again this might be
something, again, that we're going to go to you back in writing
on, because it's not something I really want to discuss too
widely, but we're doing a few things.
I agree with you that bells and whistles ought to be going
off when many, many refunds are going into an individual bank
account.
That said, there's no legal barrier to that, I don't
believe, but we ought to be doing a better job tracking it and
we are going to do that going forward.
We are also working, frankly, with software developers and
other financial institutions to try to better the flow of
information between all of those parties and the IRS, and that
will help as well.
But in terms of what specifically we're going to do, that's
something I will be glad to come back to you on.
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Mr. Platts. Yes. This, you know, is about interactions
between the IG and the IRS 3 years ago, you know, 2008,
referencing what had happened in 2007. So I realize you were
not in your position in 2007 or 2008, but you are today and I
appreciate your taking a serious look at it.
And this is one of those, what I'll call triggers, you
know, of how to use technology to better identify, you know,
intended fraud or attempted fraud. And, you know, that if one
bank account, the same bank account is going to get three or
four, I mean, the higher the number, the more scrutiny it
should get. And I would think that certainly if it's five or
more, that should get some great scrutiny. Maybe it's three,
but your data probably is going be able to better identify what
that threshold should be.
And if we're not doing that, I guess my question is why
aren't we? Because you know, again, the best way to protect the
victim is to prevent the fraud in the first place. And so what
I really--you know, my focus, as I said in the beginning, is
when there is a fraud committed, you know, are we doing
everything in our power to assist the victim of that fraud to
get back, you know, made whole as quickly as possible? And then
up front, how are we preventing the fraud?
And these triggers, I'll call these trip wires that should
be sending off kind of warning notices that the more of them
that are tripped, the more scrutiny these returns should be
getting, and this is yet one more example of the bank account.
Mr. Miller. One barrier, Mr. Chairman, obviously, is there
are going to be accounts that are going to be returned, that
are going to receive an awful lot of refunds, absolutely
appropriately, some return preparers, some financial providers
of refinance anticipation loans and other sorts of things. That
will be improved going forward as we roll out our system of
actually registering return preparers. We will have a better
way to track that than we have in the past.
Mr. Platts. The, again, up-front efforts to prevent the
fraud, one of the proposals in Senator Nelson's bill that he
has introduced regarding this issue is that individual
taxpayers have the ability, the option of opting out of e-
filing so that somebody can't do it electronically, they have
to actually provide written W-2s. Is that something that the
IRS is looking at in any fashion or would be willing to
consider?
Mr. Miller. So I think we are just looking at the bill, and
I don't have a firm reaction from the administration or even
from the IRS. I would say, you know, there would be costs to
going back to paper, obviously, and IT costs to having a toggle
switch for an individual taxpayer. So those are our immediate
concerns, but we will work that.
Mr. Platts. Okay. Related to that is instead of going back
to paper, staying electronic, but that a taxpayer could request
a PIN as opposed to being offered one by the IRS, so that you
don't go back to paper, you stay electronic, don't have the
increased manpower, but someone who hasn't yet been a victim of
identity theft, but while it was stolen and where they may
become a victim, and they are trying to be proactive rather
than after they've been victimized, ``All right, now we will
get a PIN.''
Where does that type of consideration stand with the IRS?
Mr. Miller. So one of the changes in 2012 will be not only
are we sending out these identity theft PINs to folks that
we've validated, but if you come in, ``I lost my wallet, and
I'm worried,'' we will take a look to see what your filing
requirement is. We will take a look to ensure you are who you
are, and you may very well be able to get a PIN. That's
something that's rolling out again in 2012.
Mr. Platts. So that is going to be an option, or you are
looking at making it an option?
Mr. Miller. I think it's going to be an option. I will have
to come back to you, whether it's everyone or whether it's a
certain subsection of those folks, but we're moving in that
direction.
Mr. Platts. Yes. If you can, again, give us a definitive
answer for the record; is it an option and, if so, and if not,
when will a decision be made as to when it becomes------
Mr. Miller. I believe it is. But let me verify.
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Mr. Platts. Thank you. A final question. My understanding--
well, back in January you began looking at how to better
address the issue of identity theft and the fraud related to
it, and that you plan on issuing two reports, one on the
assessment of the current state of your identity theft program
and one on the future state, where you're going to go.
Are those reports near completion?
Mr. Miller. So I had seen that in a prior testimony, and I
will have to take a look and figure out what's going on with
those. There are obvious--we have a couple of teams. One has
worked and focused on the front-end prevention. One has worked
on making the victims less victim-like as they go through our
system. Whether they have actual reports--while I have seen
many decks, whether there's actual reports we will have to come
back beyond.
Mr. Platts. If you could give us the status of those
reports, because it sounds like internally you're seeking to
do, based on my understanding, what we're after; which is, to
get a better handle on your efforts, you know, in the big
picture, of what you're doing proactively, how you're
responding to fraud, how you're handling and assisting victims.
So we welcome that information.
Mr. Miller. Absolutely.
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Mr. Platts. I will give each of you, if you have any final
comments you want to make sure are part of the record, there's
something that I did not address or the other members of the
panel did not address.
Mr. George. Mr. Chairman, I would just simply note that
TIGTA is in the process of taking a review of the IRS' action
as it relates to identity theft forward, and we anticipate two
reports in the early spring and late summer, or late spring and
early summer.
Mr. Platts. We would look forward to receiving those as
well. I think the more information we all have of the current
situation and where we're heading and how to do better by the
American people, the better off the country is going to be
financially, and taxpayers are going to be from being prevented
from being victimized.
Mr. Cimino.
Mr. Cimino. Mr. Chairman, on behalf of the Department,
we're pleased to be here and try to deal with some of these
really critical issues that the subcommittee has focused on,
and I will respond on behalf of the Department to the questions
of the ranking.
Mr. Platts. Thank you, Commissioner Miller.
Mr. Miller. I am happy to be here and will look forward to
working with you and the staff.
Mr. Platts. Generous of you to say ``happy to be here''
when you are being put on the hot seat. And I know that it's
probably less fun to be in those seats versus up here asking
the questions. My hope is that each of you understand that it's
not to put you on the spot, but really to just generate a
dialog and, you know, that we really, you know, get everything
on the radar that we think needs to be addressed.
As an oversight committee, our role is to raise questions
and to get answers to those questions of how we can make
government in total--in this case the IRS--more efficient,
better serving the American people.
I certainly understand that all three of you and your
colleagues seek to do that every day and in no way want to
suggest that you're not.
Sometimes it helps when you have an outside set of eyes or
input, you know, kind of get you to look at things outside of
maybe that typical box, and that's part of the intent of this
of hearing.
As I said earlier, our hope is that we will be better
successful--more successful on preventing fraud, protecting tax
dollars, but when it does occur, better assist the victims. And
in our June hearing it came through that we had not done a very
good job of aiding those who had been victimized. And, you
know, we clearly need to do much better while protecting the
tax dollars of all Americans.
So we'll keep the record open for 14 days for the
additional information that you're going to provide. And if we
have any final questions that we didn't get to, also we'll get
them to you in a timely fashion. But we're grateful for your
testimony here today and, again, your workday and a day out, as
well your colleagues and your various departments and your
agencies, and we know we're on the same team trying to do a
good job for the American people.
This hearing stands adjourned.
[Whereupon, at 11:32 a.m., the subcommittee was adjourned.]
[Additional information submitted for the hearing record
follows:]