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Local police facing obstacles in going after federal tax fraud suspects

TAMPA — She didn't understand how it could happen.

Diane Pfieffer never filed her own income taxes before. But an IRS employee was on the phone, telling her she had.

"I told them I hadn't filed. My late husband always filed our taxes," said Pfieffer, a 78-year-old retiree from Carrollwood. "They asked me, 'What did you do with the $4,100 we sent you?' "

Her story isn't unique.

Thousands of people nationwide try to file their federal tax returns only to find someone already filed in their names — and got fraudulent refunds.

In this scheme, the thieves use stolen identities to file the fake tax returns electronically, avoiding the need to submit authentic W-2 forms.

It can take months to get the identity theft sorted out with the IRS, Social Security Administration and other agencies.

A Largo couple had to sue the IRS to get their tax refund after they found someone had stolen their identities to get a fraudulent one. The real refund came through days later.

"Communities all over the country are awakening to the fact that tax fraud is a real issue," said U.S. Rep. Kathy Castor, who filed a bill in October to help law enforcement prosecute the crime.

Long delays with the IRS responding to customers were also addressed in a second bill from Castor, giving the agency 90 days from receiving a complaint to resolve the tax fraud issue.

Eventually, Pfieffer will clear the matter up. The IRS may even issue her a six-digit security number to prevent someone from filing in her name again.

Justice, however, will be harder to achieve.

According to Tampa police Detective Sal Augeri, his department is certain there are thousands of people locally who perpetrate this fraud. But police have made only a few dozen arrests.

Law enforcement agencies lack the staffing and funding to combat a problem that costs taxpayers hundreds of millions of dollars each year.

Even if agencies were to get more money, Augeri said, the laws are so restrictive that investigations routinely go unresolved.

The tax code prevents the IRS from providing filed tax returns to local law enforcement investigators and even taxpayers themselves, said Castor, D-Tampa.

IRS employees couldn't tell Pfieffer who stole her identity or where the person claimed to live and work, according to a 2011 report by the Government Accountability Office.

Both Castor and U.S. Sen. Bill Nelson, each a Democrat, have introduced bills over the tax fraud complaints. The bills have been referred to committees.

Both bills propose stiffer penalties for tax fraud, PIN numbers for identity theft victims, IRS employees to work as local law enforcement liaisons and wider access to tax information for prison officials.

Castor said no new money would be appropriated for the initiatives — the IRS would have to pay for it within its budget.

Until such bills are passed, it's up to Augeri and Pfieffer to do what they can.

State laws require investigators to have a mountain of evidence to prove criminal use of personal information and credit card fraud, Augeri said.

Acquiring it takes time, subpoenas and sometimes travel.

"We have to get a signed affidavit from the victim stating that the suspect did not have their permission to use the information," Augeri said.

But sometimes the victims are out of state, or their addresses aren't current. "There is just a slew of people that we won't get (enough evidence on), and they go unprosecuted," Augeri said.

Still, with all the challenges, the Tampa Police Department led a task force in cooperation with the U.S. Attorney's Office, postal inspectors, the FBI and the Hillsborough County Sheriff's Office that netted 47 suspected tax fraud perpetrators in September.

More can be done, Augeri said.

On Dec. 14, four more people suspected of fraud were arrested and charged. It's a small dent in a large problem, Augeri said.

Pfieffer agrees.

She was victimized twice.

The retiree was standing on her lawn talking to a neighbor when a mailman handed her a letter with a U.S. Treasury check.

The check was made out to someone else — but had her address.

"I called the bank in San Diego that mailed the check and they told me it was a real check for $9,000," Pfieffer recalled.

Suspicious, she researched the name on the check and found that only two women in the United States had it, one of them dead.

When she called the bank to verify whom the check was for, the date of birth matched the dead woman.

"The lady told me to return the check to the bank, but I wasn't going to send it back for anyone to cash it," Pfieffer said.

Augeri said the sheer volume of information the IRS takes could cause any check Pfieffer returns to be reissued to a criminal at a different address.

"It's a mess, just a mess," he said.

"We lack the funding to investigate it properly. But the city shouldn't have to foot the bill to investigate federal crime."

Local police facing obstacles in going after federal tax fraud suspects 01/20/12 [Last modified: Friday, January 20, 2012 11:39pm]
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