U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

91–167 PDF 2016

S. HRG. 113–813 

TAX-RELATED IDENTIFY THEFT: AN EPIDEMIC 

FACING SENIORS AND TAXPAYERS 

HEARING 

BEFORE THE

SPECIAL COMMITTEE ON AGING 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

WASHINGTON, DC 

WEDNESDAY, APRIL 10, 2013 

Serial No. 113–3 

Printed for the use of the Special Committee on Aging 

( 

Available via the World Wide Web: http://www.fdsys.gov 

DeShaun on LAP51NQ082 with DISTILLER

(II) 

SPECIAL COMMITTEE ON AGING 

BILL NELSON, Florida, Chairman 

RON WYDEN, Oregon 

ROBERT P. CASEY JR, Pennsylvania 

CLAIRE MCCASKILL, Missouri 

SHELDON WHITEHOUSE, Rhode Island 

KIRSTEN E. GILLIBRAND, New York 

JOE MANCHIN III, West Virginia 

RICHARD BLUMENTHAL, Connecticut 

TAMMY BALDWIN, Wisconsin 

JOE DONNELLY Indiana 

ELIZABETH WARREN, Massachusetts 

SUSAN M. COLLINS, Maine 

BOB CORKER, Tennessee 

ORRIN HATCH, Utah 

MARK KIRK, Illinois 

DEAN HELLER, Nevada 

JEFF FLAKE, Arizona 

KELLY AYOTTE, New Hampshire 

TIM SCOTT, South Carolina 

TED CRUZ, Texas 

KIM LIPSKY, Majority Staff Director 

PRISCILLA HANLEY, Minority Staff Director 

DeShaun on LAP51NQ082 with DISTILLER

(III) 

CONTENTS 

Page 

Opening Statement of Chairman Bill Nelson ........................................................ 1 

Prepared Statement ......................................................................................... 60 

Statement of Ranking Member Susan M. Collins ................................................. 4 

Prepared Statement ......................................................................................... 68 

PANEL OF WITNESSES 

Marcy Hossli, Victim of Tax Refund Fraud ........................................................... 6 

Sal Augeri, Detective, Criminal Intelligence Bureau, Tampa Police Department ...................................................................................................................... 10 

Honorable Kathryn Keneally, Assistant Attorney General, Tax Division, 

United States Department of Justice ................................................................. 19 

Honorable J. Russell George, Treasury Inspector General for Tax Administration, United States Department of the Treasury .............................................. 28 

APPENDIX 

PREPARED WITNESS STATEMENTS

Marcy Hossli, Victim of Tax Refund Fraud ........................................................... 8 

Sal Augeri, Detective, Criminal Intelligence Bureau, Tampa Police Department ...................................................................................................................... 13 

Honorable Kathryn Keneally, Assistant Attorney General, Tax Division, 

United States Department of Justice ................................................................. 22 

Honorable J. Russell George, Treasury Inspector General for Tax Administration, United States Department of the Treasury .............................................. 30 

ADDITIONAL STATEMENTS FOR THE RECORD 

Colleen M. Kelley, National President, National Treasury Employees Union ... 70 

DeShaun on LAP51NQ082 with DISTILLER

DeShaun on LAP51NQ082 with DISTILLER

(1) 

TAX-RELATED IDENTIFY THEFT: AN 

EPIDEMIC FACING SENIORS AND TAXPAYERS 

WEDNESDAY, APRIL 10, 2013 

U.S. SENATE, SPECIAL COMMITTEE ON AGING, Washington, DC. 

The Committee met, pursuant to notice, at 2:02 p.m., in Room 

SD–562, Dirksen Senate Office Building, Hon. Bill Nelson, Chairman of the Committee, presiding. 

Present: Senators Nelson, McCaskill, Donnelly, Warren, Collins, 

and Ayotte. 

OPENING STATEMENT OF SENATOR BILL NELSON, CHAIRMAN 

The CHAIRMAN. Good afternoon. 

Senator Collins will be along in a moment, and she had called 

and requested that we go ahead. 

I want to thank all of you for being here today to discuss an 

issue that is becoming increasingly apparent especially as we are 

approaching tax day. 

Over the past couple of years, this problem has been exploding 

across the country. It is highly relevant and prevalent in my State 

of Florida. Since 2010, our office has received over a thousand complaints from individuals who file their taxes only to be told by the 

IRS that their refund had already been claimed by someone else. 

Now, you can imagine someone files their IRS return and IRS responds, well, your return has already been filed. I must say, as I 

approached this tax period, I have had that thought several times. 

Well, you remember Willie Sutton, and he said the reason he 

robbed banks was that was where the money is. Well, today’s 

criminals looking for money, they do not need to go stand on the 

corner and deal drugs. They do not need to use a crowbar, because 

the laptop has replaced the crowbar. 

You will hear from our detective from Tampa how street crime 

has actually diminished as this new wave of crime is so much easier and where they can sit in their residence with a laptop and rake 

in thousands and thousands of dollars to the point at which the 

IRS is estimating that this is over a $5 billion crime. And, of 

course, who is it coming from? It is coming from the U.S. Treasury 

and they are getting the money right from their own home. 

So, we are dealing with a new type of criminal. These criminals 

are gaining access to people’s social security numbers. They are 

getting other personal information and they are filing these fraudulent tax returns in somebody else’s name creating a fictitious tax 

return in order to get a tax refund. 

DeShaun on LAP51NQ082 with DISTILLER

2 

They file electronically, and they have then the tax refund loaded 

onto a pre-paid debit card without providing the physical address 

or even without opening a bank account to make it all the more 

difficult to trace. 

Now, you remember last month we talked about the Jamaican 

lotto scam where they were intimidating seniors into sending them 

money and we found that these third-party cards, these debit 

cards, were a preferred way that the fraudsters could get the 

money sent to them that made it less likely to be traced. The same 

thing is happening here. So, some crooks steal a few thousand dollars while others steal millions of dollars. 

According to the Treasury Inspector General for Tax Administra- tion, we are losing over $5 billion each year to the crime. Now, the 

problem is getting worse. 

Last year the IRS reported identity theft incidences nearly tripled. That was between 2010 and 2011. The Federal Trade Commission recently reported that the crime is continuing to climb at 

an astronomical rate eclipsing even identity theft-related credit 

card fraud as shown in this chart. 

Look at 2008 all the way to 2012. Tax related fraud is the red 

bar. The dark bar is the credit card fraud. So, obviously that is 

what is happening. We have identified maybe a dozen states where 

this is more prevalent than others. My State of Florida is certainly 

one of them. 

Now, why is it here? This is the Aging Committee. Because they 

are preying on the elderly. According to a recent investigation by 

the Treasury’s Inspector General, seniors along with low income 

people who are not required to file tax returns, students also aged 

16 to 22, and deceased individuals are among the most frequent 

targets of these tax thieves. 

Why deceased? I actually had a hearing on this in the Subcommittee that I chaired in the Finance Committee. You may be 

surprised to find out that when a person dies, their Social Security 

number is published by the Social Security Administration. 

I have tried nine ways to Sunday to get the Commissioner of Social Security to delay putting up in the putting up in the public domain, now, there are certain entities that would have reason to 

have access. I have tried to say, well, you can have access for those 

entities that have a legitimate reason to know. But why put it out 

there so that people can grab a Social Security number and an 

identity and suddenly file a tax return? 

Needless to say, there have been a number of grieving parents 

who have lost a child that that child’s identity is stolen and used 

for these purposes. 

Now, these criminals get more and more organized, our ability to 

detect and prevent identity theft is lagging behind their ability to 

get organized. 

Now, fortunately, the IRS and the Department of Justice, who 

we will hear from in the second panel, have recognized the scope 

of this problem and they have shown a determination in developing 

new policies to turn the tide on these criminals. 

They have formed task forces and information sharing programs 

to streamline enforcement actions against known fraudsters. Although these are steps in the right direction, there are still many 

DeShaun on LAP51NQ082 with DISTILLER

3 

shortcomings that we need to be addressing, and we are going to 

address some of those here today. 

We have taxpayers like Susan Fox-Greenberg of Parkland, Flor- ida, for example, who had to wait two years to get her $21,000 refund after falling victim to this scheme. That is two years to get 

a tax refund. That is not acceptable. 

But unfortunately, it is illustrative of what has happened of the 

long wait victims have had to endure before receiving the refund 

that they are owed. 

We have had some help with the media in getting this out. For 

some reason, it is concentrated in Tampa, also in Miami. CBS 

Channel 4, WFOR, has really made this a cause ce ́le`bre as they 

have tried to alert people to what is happening and these kind of 

instances that our public is getting fleeced and in the process the 

taxpayer is getting fleeced. 

Last year, it took the IRS an average of 196 days to resolve the 

identity theft cases and the increase in the number of cases has resulted in a backlog of 300,000 cases with an average wait time 

more than 180 days. 

Obviously, you know that many Americans rely on getting that 

tax refund back so that they can pay their bills; and they should 

not have to wait six months much less they should not have to wait 

two years as we have seen some people have to do. 

The bottom line is that the IRS is going to be able to better protect and serve taxpayers if we can reduce that time. Victims should 

not have to go through the mountains of IRS red tape to get their 

cases resolved or tax records cleaned up. 

I want to give credit where credit is due. The IRS has been working on this. You should have heard some of the horror stories that 

we had to begin with about two years ago when I had that hearing 

in the Finance Committee. 

At a previous hearing on this topic, we heard testimony from several victims including a father who had recently lost his infant 

daughter, one of the fraudsters stole the baby’s Social Security 

number; from that Social Security death master file, filed a fake return, and that parent then had to deal with the IRS when it rejected his legitimate family tax return that, since it was the previous year had his daughter as a dependent. They should not have 

to go through this. 

So, stories like this are what brings us here today; and it is why 

we have filed the Theft and Tax Fraud Prevention Act. This legislation includes provisions requiring the IRS to speed up the time 

that it takes victims to get their refunds. It directs the agency to 

develop the real-time system for accelerating information matching. 

Often the IRS sends a check out the door before it can verify 

whether the information on the return is correct. I also want to 

credit the IRS that a couple of years ago the legitimate taxpayers 

had no way of filing their returns. They said you cannot file a return. It has already been filed, even though it was fraudulent; and 

once you got that resolved, they needed some way of having security that they were going to be able to file in the future. 

We got the IRS and IRS did this. Thank you. Giving them a special personal identification number so that they could deal through 

that identification in addition to their Social Security. 

DeShaun on LAP51NQ082 with DISTILLER

4 

So, this bill also expands the Identity Protection PIN program, 

and we have heard from a number of victims that that program 

has clearly helped. 

Now, one example is a lady named Ms. Carson, a 70-year-old 

grandmother from Aventura. She did not receive a PIN number 

when her refund was stolen just in 2011. When she called the IRS 

just last month to ensure that she would not be victimized a second 

time, she was astonished to find that a fraudulent tax refund had 

yet again been filed in her name. 

Another victim who had trouble receiving a PIN is Marcy Hossli 

of Lakeworth, and she is here today and she is going to share her 

story with us. 

As we get close to April the 15th, in these final days, it is important to examine how tax-related identity theft continues to be a 

drain on the U.S. Treasury and a hardship for the innocent victims. 

As more and more companies require our personal information in 

exchange for vital services, it is all the more critical that we raise 

the standard for information security. And the fact is that until we 

do a better job of enforcing our privacy laws and helping institutions properly safeguard the personal information of their patrons, 

this problem is only going to get worse. 

That is why we have to do more to contain what is becoming an 

epidemic. We must help right those who have been wronged and 

we must enact policies to help prevent this from happening to others. 

Senator Collins, I had explained to them that you had said for 

me to go ahead and we are glad you are here. Your comments 

please. 

OPENING STATEMENT OF SENATOR SUSAN M. COLLINS 

Senator COLLINS. Thank you very much, Mr. Chairman. 

First, let me apologize for my late arrival. There was nothing I 

could do about it. I got here as quickly as I could. 

I want to begin by saluting your personal leadership and determination on this issue. You have been the member of Congress who 

has done more to shine a spotlight on this problem than anyone 

else, and I am delighted to join you at this hearing today. 

Next Monday, April 16, is tax day, the deadline for individual tax 

returns to be filed. I have a feeling that is not news to anybody in 

this room. By the close of the day on Monday, the IRS will likely 

receive more than 146 million individual income tax returns. 

Nearly 83 percent of these filers will be eligible for refunds. 

These refunds are not a gift from the Federal Government. They 

are the return of funds belonging to taxpayers over withheld from 

their paychecks last year. 

In the coming weeks, millions of American families will be eagerly awaiting these tax refunds, money that they may need to pay 

off debts or to plug gaps in their family budgets. 

But taxpayers are not the only ones eagerly awaiting these refunds. Criminal gangs have figured out that it is far cheaper and 

easier for them to steal taxpayers’ identities and hijack their tax 

refunds than it is to traffic in drugs, rob banks, or fence stolen 

property. 

DeShaun on LAP51NQ082 with DISTILLER

5 

The IRS reports that the number of identity theft related tax 

fraud cases has exploded from approximately 52,000 in 2008 to 

close to one million in 2012; and these numbers, shocking as they 

are, probably underestimate the problem. 

An analysis by the Treasury Inspector General for Tax Administration suggests another 1.5 million tax returns with the refunds 

totaling in excess of $5 billion are being scammed each year. 

According to media reports and law enforcement officials, the 

scam works like this. Identity thieves obtain Social Security numbers and other sensitive personal information from sources like 

hospitals, schools, or assisted living facilities often by recruiting 

employees to steal that information. 

They then use this information to prepare fraudulent tax returns. The thieves make sure to file early as soon as the tax filing 

season opens in January to increase the odds that they can get a 

refund before the real taxpayer sends in his or her return. 

The thieves are known to hold what they call ‘‘make it rain’’ parties where they bring stolen laptops to motel rooms with Internet 

access and work together churning out scores of bank returns. With 

each refund worth on average $3500, the money can add up quickly. 

Once the thefts file the fraudulent tax returns, the IRS processes 

them and issues refunds, at times by loading the refund onto a prepaid card like those issued by Green Dot and NetSpend. These 

cards are like cash and can be used by thefts without identification 

or other verification. 

You may be wondering why the IRS processes these fraudulent 

returns in the first place. I know I certainly did. The answer is 

simple. Taxpayers are entitled to file their returns as early as mid 

January but the IRS does not receive the information it needs to 

verify a taxpayer’s earnings and withholdings until often the end 

of March. 

Of course, there are other ways the IRS could figure out that it 

is being scammed. The Inspector General discovered that criminals 

often use the same physical address for the fraudulent returns they 

file. For example, in 2010, criminals used the exact same physical 

address in Lansing, Michigan to file more than 2100 returns and 

receive $3.3 million in refunds from these returns. Another address 

in Chicago, the same address, was used on 765 tax returns producing refunds of more than $900,000. 

This is not a victimless crime. Taxpayers who have refunds hijacked by fraudsters often wait years to get the refunds to which 

they are entitled. Many are re-victimized year after year as we will 

hear from one of our witnesses today. 

A substantial number become victims of other forms of identity 

fraud. Worst of all, these victims are often the most vulnerable elderly citizens who earn so little that they are not even required to 

file a return. The IG estimates that 76,000 low income elderly citizens were victims of tax fraud identity theft in 2010 alone. 

Mr. Chairman, you have also indicated that your home state has 

been hit especially hard. According to the Federal Trade Commission, Florida has the highest per capita rate of reported identity 

theft complaints in the country. 

DeShaun on LAP51NQ082 with DISTILLER

6 

By that measure, my home State of Maine has been relatively 

fortunate because we rank 46 for reported identity theft complaints. But I will tell you that that fact provides little solace because the number of tax fraud related complaints has risen dramatically in Maine in recent years in keeping with the national 

trend; and all of those affected by this fraud, whether they live in 

Maine or Florida or elsewhere suffer the same way. 

Again, Mr. Chairman, I look forward to the testimony of our witnesses and to working with you as we seek to combat this epidemic 

of identity theft tax fraud. 

Thank you. 

The CHAIRMAN. Thank you, Senator Collins. 

We are first going to hear from Marcy Hossli. She is a victim. 

And then, we are going to hear from Detective Sal Augeri and he 

is going to explain to you some of the things that it is almost unbelievable but how street crime has actually gone down as this crime 

has gone up, and as this crime has gone up, the gross of these 

criminals has grown larger. 

So, you are going through some interesting stuff today. 

Ms. Hossli. 

STATEMENT OF MARCY HOSSLI, VICTIM OF TAX REFUND 

FRAUD 

Ms. HOSSLI. Chairman Nelson, Ranking Member Collins and 

other members of the committee, I am the victim of identity theft 

through tax fraud three years in a row now. 

On March 26, 2012, I received a letter from the IRS informing 

me that I was a victim. That was the beginning of a long and frustrating journey that continues today. 

In recent months, I have finally gotten refunds from my 2010 

and 2011 taxes but I am still waiting to get my refund from my 

2012 taxes, and I really need the money. I am a cancer survivor. 

I was diagnosed with Lymphoma in 2005. I had breast cancer surgery last year, and the Lymphoma has returned. I currently owe 

about $4000 in medical bills. 

The letter that I first received from the IRS informed me that I 

had been a victim of tax fraud for my 2010 and 2011 taxes. They 

said red flags were raised because of suspicious claims on the tax 

return that was submitted in my name. They also told me that it 

would take three months for them to process my case. I was told 

to print and mail my 2010 and 2011 tax returns and send some additional items. 

The IRS also said they would issue me a six digit PIN number 

later that year to use on my tax returns for the next three years. 

I am still waiting for that PIN number. 

The IRS also told me to file my case with local police, the Federal 

Trade Commission, and Equifax. I did all that and more. I called 

the Palm Beach County Sheriff’s Department and filed a report. 

They told me it just ends up in a file. I asked them about participating in the IRS Law Enforcement Assistance Program, or LEAP, 

a program that enables local law enforcement to more easily pursue identity theft cases. They had never heard of it. They said they 

would get back with me after looking into it, but I never heard 

back. 

DeShaun on LAP51NQ082 with DISTILLER

7 

I had done my own taxes on Turbo Tax for my 2010 and 2011 

taxes. But this year I decided to file my taxes with a specialist. I 

watched him e-file them on February 21st. A day later, the IRS 

contacted him to tell him that my tax return had already been filed 

again. 

I once again went through the same process as the year before 

and compiled all of my paperwork. I called the IRS. They told me 

I should have an alert on my file because there was an identity 

theft indicator on my 2010 and 2011 tax returns. I asked who it 

was that filed my taxes in 2011 and 2012 and who let this year’s 

filing slip through. There has to be a record who filed them. She 

could not tell me. 

I later spoke with another woman at the IRS who told me it was 

my own fault that I had not received my refund and that I should 

have received a letter in the mail with my caseworker’s name on 

it. When I told her to please reissue the letter because I never received it, she said it could not be reissued. 

She was quite angry with me and made me feel stupid and small 

because she said I was just one of many people dealing with this 

same problem. I was near tears on the phone. 

Finally, a different woman from the IRS reached out and asked 

me to call her back at ‘‘12ish Mountain Time.’’ I could not because 

I was at work. She said that if she did not hear from me, she would 

close my case. I spoke with another person in her office and asked 

for the woman to call me back, and I have never heard anything. 

I reached out to the Federal Trade Commission again and the 

State Attorney’s Office. They said there was nothing they could do. 

I even reached out to the FBI. They told me they do not deal with 

identity theft-related tax cases. 

I reached out to news stations and have been interviewed for stories. I have called members of Congress. Senators Nelson and 

Rubio have responded to me, and Senator Nelson’s office is the first 

time anyone has legitimately offered any assistance. 

I received a letter at the end of March this year from the IRS 

that they have verified my claim of identity theft for my 2012 

taxes, that there is an identity theft indicator on my account, that 

no further action was needed on my part. But the letter still did 

not include an identity protection PIN even though I was promised 

one over a year ago. 

I am afraid all of this will happen again next year if I do not get 

a PIN. I should never have to go through anything like this, nor 

should anyone else. I feel violated. It is hard to concentrate in 

work. I am stressed constantly and have had to ask my doctor for 

help to deal with these problems. 

I have no idea how my information got out there. I have spent 

a lot of time in hospitals due to my health condition. So, it is possible my personal information was obtained there. Because of all 

this, a stranger knows more about me than my friends and family. 

I hope you can do something to stop this. Thank you for this opportunity to share my story, and I am happy to answer any questions 

you may have. 

[The prepared statement of Ms. Hossli follows:] 

DeShaun on LAP51NQ082 with DISTILLER

8 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 11 here 91167.011
9 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 12 here 91167.012
10 

The CHAIRMAN. Well, I hope we can do something about this very 

sad tale of woe that you have brought to us. I hope we can do 

something about it today. 

In the second panel, we will have the IRS and the Treasury Department; and they have taken note of what you have just said; 

and at the conclusion of this hearing, I would like to see both 

Treasury and IRS and you, Ms. Hossli, in the ante room and let 

us see if we can start trying to solve her problem. 

Before you all come up to testify, if you would start e-mailing 

whoever you need to check on this, I sure would appreciate it. 

All right. Now, we have got Detective Sal Augeri. Have I pronounced that right? 

Mr. AUGERI. Yes, sir. 

The CHAIRMAN. Sal Augeri. He is in the Criminal Intelligence 

Bureau of the Tampa Police Department. He has been working as 

one of the IRS’s identity theft task forces to go after these criminals. Share with us. 

STATEMENT OF SAL AUGERI, DETECTIVE, CRIMINAL 

INTELLIGENCE BUREAU, TAMPA POLICE DEPARTMENT 

Mr. AUGERI. Mr. Chairman, members of the Committee, good 

afternoon. 

On behalf of the City of Tampa, Mayor Bob Buckhorn and Chief 

Jane Castor of the Tampa Police Department, I am Detective Sal 

Augeri and I would like to thank you for inviting me here today 

to testify before your committee regarding identity theft and specifically Stolen Identity Refund Fraud. 

Last March of 2012, I appeared before Senator Nelson to explain 

how rampant identity theft was in Tampa and the surrounding bay 

area. We were experiencing a crime wave that was unknowingly 

funded through hard working taxpaying Americans. ‘‘Turbo Tax’’, 

as it was commonly known among the criminals, was spreading 

throughout Tampa, the surrounding counties, and the State of 

Florida at an alarming rate, that estimates of the dollar loss were 

into the hundreds of millions, if not billions. 

The City of Tampa would later be identified as ‘‘Ground Zero’’ for 

this crime. Throughout the later part of 2010 and the first half of 

2011, law enforcement could not develop a uniform approach to 

combating the crime, solicit the necessary help of the Internal Revenue Service Criminal Investigations or come to some type of consensus on the prosecution of these cases between the U.S. Attorney’s Office and the Hillsborough County State Attorney’s Office. 

During this time, local and state law enforcement had very little, 

if any, joint cooperation with enforcement efforts from IRS–CI. As 

many of us would later learn, disclosure laws protecting the sharing of tax information basically ‘‘handcuffed’’ IRS–CI and therefore 

the joint sharing of information could not take place. 

Due to the many enforcement and prosecution issues, criminals 

continue to make a large sum of money from tax fraud all in the 

face of law enforcement. After the successful operation headed by 

the United States Secret Service in September of 2011, Operation 

Rainmaker brought the problem to the attention of mainstream 

America and especially to the residents of Florida. 

DeShaun on LAP51NQ082 with DISTILLER

11 

With that, it also brought the problem that law enforcement was 

having dealing with this crime to the forefront. Among them, a 

need to unify efforts between local, state and federal law enforcement officials, the ability to share critical information needed for 

establishing evidence that was crucial for a successful prosecution 

and a means to utilize that information for introduction into a 

state or federal judicial system. 

Following the hearings in March of 2012, IRS–CI introduced the 

new ‘‘Waiver Pilot Program’’ for the Tampa Bay Area. With that 

came the arrival of Special Agent in Charge, James Robnett and 

Assistant Special Agent in Charge, Ismael Nevarez. 

Significant positive changes began and IRS–CI became the focal 

point in bringing local, state and federal agencies together to combat this crime. The ‘‘Alliance Group’’ was formed in July of 2012, 

and it consisted of the Tampa Police Department, Hillsborough 

County Sheriff’s Office, Polk County Sheriff’s Office, Pasco County 

Sheriff’s Office, Pinellas and Manatee County Sheriff’s Office, the 

Florida Department of Law Enforcement, the United States Secret 

Service, FBI, United States Postal Service, the Hillsborough County and Polk County State Attorney’s Offices, Office of the State 

Wide Prosecutor and the U.S. Attorney’s Office for the Middle District of Florida. 

This collective effort is overseen and coordinated by the Internal 

Revenue Service-Criminal Investigations. The ‘‘Waiver Program’’ 

introduced a format that allowed victims to sign an IRS form which 

would enable local law enforcement authorities to request a copy 

of the fraudulent return that was submitted and accepted by the 

IRS. 

This information allowed law enforcement to continue with their 

investigation, obtain critical and vital evidence and subsequently 

lead to either federal or state charges being brought against the 

known suspect committing the crime. 

In addition, the Department of Justice Tax Division along with 

IRS–CI streamlined their processes which have resulted in a 

quicker ‘‘turn around’’ of these financial investigations. With this, 

the U.S. Attorney’s Office has been able to expeditiously bring 

charges against these suspects and receive a final resolution within 

the court system. 

Recently, the successful federal prosecution of Russell Simmons, 

a Tampa used car salesman and convicted drug trafficker, highlighted the enormous problems associated with this type of crime. 

The Simmons investigation began in the early part of 2011, involved a search warrant of his business on August 31, 2011 and his 

arrest for a state charge of Identity Theft and Credit Card Fraud. 

The investigation continued for many months due to the obstacles in place at that time. Federal charges were eventually brought 

against Simmons and he was indicted in May of 2012. This was a 

multi-agency effort and it was comprised of the Tampa Police Department, the United States Secret Service and IRS–CI which culminated in Simmons pleading guilty in November of 2012 to identity theft related charges. 

The investigation found that prior to his arrest in August 2011, 

Simmons had attempted to defraud the U.S. Treasury of $8.9 million and he ultimately received $1.7 million. Simmons was senDeShaun on LAP51NQ082 with DISTILLER

12 

tenced on March 18, 2013 to 15 years in federal prison, a sentence 

which has resonated throughout Tampa and the Bay Area. 

Given the close coordination between IRS–CI and the Alliance 

partners, the Russell Simmons investigation would move much 

faster today. All identity theft leads are brought to the Alliance 

Group and there is immediate coordination and sharing of intelligence. Joint investigative actions are taken, resources are shared, 

evidence is gathered and quick arrests are made. 

Our local Crime Stoppers is also part of the effort and tips from 

Tampa Area citizens go directly to the Alliance members. The Alliance Group concept has resulted in many more prosecutions this 

year than last year. 

Some of the recent prison sentences handed out by the Federal 

Court of the Middle District of Florida include Remesa Buemer, 65 

months prison, Danielle Denson, 76 months prison and most recently, the ‘‘guilty’’ pleas entered by Rashia Wilson and Maurice 

Larry whose names are synonymous with tax refund fraud. 

These cases are a direct reflection of U.S. Attorney Robert 

O’Neill’s office and their commitment to this fight. Chief Castor 

and the Tampa Police Department are committed to their law enforcement counterparts that comprise the ‘‘Alliance Group’’ and we 

are part of their recently appointed Task Force Officers assigned to 

the Internal Revenue Service Criminal Investigations. 

I sit here before you as a Deputized IRS Task Force Officer, with 

expanded jurisdictions, federal authorities and on a daily basis, I 

work alongside the IRS–CI Special Agents investigating identity 

theft related tax fraud cases. 

Within the Tampa Bay Area, outreach efforts through SAC 

James Robnett’s office with local banks has streamlined the expedient detection and recognition of fraudulent tax refund deposits 

and the subsequent seizure and return of stolen tax payer money 

to the U.S. Treasury. 

Although this crime is still prevalent and lucrative to the criminals that engage in it, law enforcement efforts have had positive 

changes. Sources on the street have told me of the increased police 

effort and that it is more difficult to get returns back from the U.S. 

Government. 

The CHAIRMAN. Detective, we need you to wrap up. 

Mr. AUGERI. However, this problem cannot be solved by law enforcement alone. Two other efforts need to be made on the initial 

filing through the Internal Revenue Service and through parent 

companies credit card programs, and a second initiative of maintaining and securing personal identification. 

I believe our 2013 collected enforcement efforts have never been 

better and I foresee a continued positive progression with that endeavor. 

Thank you. 

[The prepared statement of Mr. Augeri follows:] 

DeShaun on LAP51NQ082 with DISTILLER

13 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 13 here 91167.013
14 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 14 here 91167.014
15 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 15 here 91167.015
16 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 16 here 91167.016
17 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 17 here 91167.017
18 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 18 here 91167.018
19 

The CHAIRMAN. Thank you, Detective Augeri. 

I have conferred with Senator Collins and we are going to do 

something different here. I am going to ask our next two witnesses 

if you would just pull your chairs up to the table. If our assistant 

could assist to rearrange the table, Senator Collins and I feel like 

that the testimony of all would be very helpful here and then I am 

going to turn to our Committee members first for your questions, 

and I will just wait until last. All right. 

First, we are going to hear Ms. Keneally. She is the Assistant Attorney General for the Tax Division of the United States Department of Justice. Ms. Keneally’s division works with the IRS and regional district attorneys to prosecute tax fraud. 

Then, we are going to hear from Russell George. He is the Treasury Inspector General for the Tax Administration at the U.S. Department of the Treasury. 

The Inspector General has conducted some of the most in-depth 

research on identity theft related tax fraud bringing to light the 

cost of the fraud to the federal budget and the shortcomings of IRS 

in resolving these cases. 

As I said earlier, we are arranging to bring the IRS down here 

so that, Ms. Hossli, we can have a meeting between you and them 

after this hearing. 

So, let me turn first to Ms. Keneally. 

STATEMENT OF THE HONORABLE KATHRYN KENEALLY, ASSISTANT ATTORNEY GENERAL, TAX DIVISION, UNITED 

STATES DEPARTMENT OF JUSTICE 

Ms. KENEALLY. Chairman Nelson, Ranking Member Collins, and 

members of the Special Committee, thank you for the opportunity 

to appear before you this afternoon to discuss the Department of 

Justice’s efforts to combat tax refund fraud arising from identity 

theft. 

Before I address my prepared comments, I would like to confirm 

that I have sent an e-mail to the Acting Commissioner of the Internal Revenue Service and to his counselor raising Ms. Hossli’s 

issues. We will absolutely follow up with that. 

The CHAIRMAN. Thank you very much. 

Ms. KENEALLY. The Department greatly appreciates the commitment that the Chairman, the Special Committee, and the staff 

have brought to this important issue. Combating the illegal use of 

social security numbers and other personal identification information to file fraudulent tax refund claims is a top priority for both 

the Division and U.S. Attorneys’ Offices across the Nation. 

Your efforts to bring attention to this fast-growing and insidious 

crime will help educate taxpayers about the importance of detecting and reporting identity theft and tax fraud and will send a 

strong message that their schemes will be detected and prosecuted 

to the fullest extent of the law. 

The Department of Justice’s Tax Division, which I have the privilege of leading, has one purpose: to enforce the Nation’s tax laws 

fully, fairly, and consistently, through both criminal and civil litigation. 

DeShaun on LAP51NQ082 with DISTILLER

20 

The Nation-wide reach of the Tax Division’s centralized criminal 

tax enforcement facilitates the government’s ability to respond efficiently and forcefully to often-changing patterns of wrongdoing. 

The recent explosion in the use of stolen social security numbers 

and personal identification information to file fraudulent tax refund claims is an example of this type of challenge. 

Stolen identity refund fraud has been described fairly well by the 

Chairman and the Ranking Member in your opening comments. 

While it can be described fairly simply and straightforwardly, it 

has been our experience that it is often implemented through complex multi-step and multilevel themes and schemes that cross state 

lines and span the country. 

The low physical risk and high potential for financial gain has 

made stolen identity refund fraud a crime of choice for drug dealers 

and gangs. 

Too often, the most adorable members of our communities, the elderly and the infirm, have become victims when their identities 

have been stolen at nursing homes and hospitals. 

And as has also been mentioned today, the pain of grieving families has been increased through the use of information taken from 

public death lists, and Postal workers have been compromised, 

robbed, and in one instance murdered to gain access to refund 

checks. 

While the IRS will make good on any refund that is due to the 

taxpayer, as we have heard today, there are unfortunately inevitable burdens while this is sorted out and the victims often feel a 

profound sense of violation again as we have heard today. Most 

fundamentally, all honest tax payers are victimized by the loss to 

the Federal Treasury. 

The Department and the IRS have devoted significant resources 

to address the stolen identity refund fraud. We have successfully 

prosecuted a large number of cases resulting in lengthy prison sentences and substantial fines and forfeitures. 

The first six months of this fiscal year the Tax Division has authorized more than 275 SIRF investigations involving more than 

500 suspects across 37 states, the District of Columbia, and Puerto 

Rico. 

In many cases, the SIRF crime was first uncovered by local law 

enforcement who discover the Treasury checks and debit cards. 

Recognizing that there are fast-moving law enforcement needs in 

such cases, the tax division issued Directive 144, which was the result of collaborative efforts among the Tax Division, the Internal 

Revenue Service, and the U.S. Attorney’s Offices. 

Directive 144 streamlines the initiation of SIRF tax prosecutions 

in authorizing U.S. Attorney’s Offices to open tax related grand 

jury investigations in SIRF matters to bring complainants against 

those involved in SIRF crimes and to obtain seizure warrants for 

forfeiture of criminally derived proceeds arising from SIRF crimes, 

steps that require prior authorization from the Tax Division for 

other tax crimes. 

Simultaneous with the issuance of Directive 144, the Tax Division also implemented expedited procedures by which the Tax Division committed to review a request to indict within three calendar 

days in fast-moving, reactive SIRF cases. 

DeShaun on LAP51NQ082 with DISTILLER

21 

While providing for expedited procedures, Directive 144 serves a 

second law enforcement purpose, specifically the centralization of 

knowledge about SIRF crimes through the reporting of information 

by the U.S. Attorney’s Offices to the Division and the IRS. 

This enables prosecutors and law enforcement agencies to work 

together to identify schemes and to pursue the most culpable 

schemers. It also aids our efforts to give the IRS real-time information so that the IRS can work to stop the crime at the door through 

improved filters as well as to address the needs of victims quickly 

and effectively. 

The prosecution of SIRF crimes is a national priority; and together with our law enforcement partners, we will continue to look 

for the most effective ways to bring this conduct to an end and to 

punish the wrongdoers. 

Thank you again for all that you have done and for the opportunity to provide the Department’s perspective on this issue, and 

I look forward to answering any questions you have. 

[The prepared statement of Ms. Keneally follows:] 

DeShaun on LAP51NQ082 with DISTILLER

22 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 19 here 91167.019
23 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 20 here 91167.020
24 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 21 here 91167.021
25 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 22 here 91167.022
26 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 23 here 91167.023
27 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 24 here 91167.024
28 

The CHAIRMAN. Thank you. All right. 

Mr. George, tell us what the IG has done and just avoid repetition of stuff that has already been put before the Committee. 

Of course, each of your written statements will be entered into 

the record. 

Please proceed. 

STATEMENT OF HONORABLE J. RUSSELL GEORGE, TREASURY 

INSPECTOR GENERAL FOR TAX ADMINISTRATION, UNITED 

STATES DEPARTMENT OF THE TREASURY 

Mr. GEORGE. Thank you, Mr. Chairman. 

Chairman Nelson, Ranking Member Collins, and members of the 

Committee, again thank you for the invitation to provide my views 

on the topic of tax-related identity theft. 

As the Inspector General for Tax Administration, commonly referred to as TIGTA, I represent an organization dedicated to protecting the integrity of our Nation’s $2 trillion tax system. 

The title of this hearing appropriately characterizes the problem 

as an epidemic confronting all taxpayers and especially senior citizens. As noted, our audits have documented alarming growth in 

the problem of identity theft tax fraud. 

TIGTA has provided ongoing oversight of the issue because of the 

rapidly growing nature of this tax crime, its consequences for victims, and the need for further improvements in the IRS’s handling 

of identity theft. 

As was noted, the number of identity theft cases have continued 

to rise since 2011. As of December 31 of last year, the IRS identified almost two million identity theft incidents, and it is very likely 

that the number of identity theft cases will grow during the current filing season. 

Last summer, my organization, TIGTA, reported that the impact 

of identity theft on tax administration is significantly greater than 

the amount the IRS detects and prevents during the filing season. 

Using data available after April 15, my auditors identified an additional one and a half million tax returns that the IRS had not 

identified, with potentially fraudulent tax refunds, totaling in excess of $5 billion. 

If not addressed, we estimate that the IRS could issue approximately $21 billion in fraudulent tax refunds resulting from identity 

theft over the next five years. 

Unfortunately, as you pointed out, Senator, and it is so important that I will repeat this, senior citizens are highly vulnerable to 

identity theft tax fraud. For tax year 2010, as you pointed out, we 

identified over 76,000 tax returns filed using the identities of older 

Americans, again, that characteristics of IRS-confirmed identity 

theft cases. These tax returns resulted in fraudulent tax refunds in 

excess of $370 million. 

Last year, we evaluated whether the IRS is effectively providing 

assistance to victims of identity theft. We found that the IRS’s procedures are not adequately communicating identity theft policies to 

taxpayers. Unfortunately, this results in an increased burden for 

the victims of identity theft which is the last thing a victim of identity theft needs, as evidenced by Ms. Hossli. 

DeShaun on LAP51NQ082 with DISTILLER

29 

As Ms. Hossli described, identity theft takes an enormous financial and emotional toll on its victims. When a taxpayer’s identity 

has been compromised and tax return information falsified, the 

taxpayer needs immediate assistance. What they want and what 

they need is an identity theft hotline at the IRS. 

Instead, identity theft victims get the equivalent of the runaround when they contact the IRS seeking assistance. Our report 

found that customer service is highly problematic for identity theft 

victims. 

The audit also found that taxpayers whose identities are stolen 

receive confusing and conflicting instructions from the IRS and 

many times delays of, as you pointed out, longer than a year occur 

to resolve the tax problems resulting in an increased burden for the 

victims. 

The growth in these cases has overwhelmed the IRS’s resources 

and burdened taxpayers. TIGTA has made a number of recommendations to address these issues. The IRS, to its credit, has 

agreed to many of them, and we will be following up with an audit 

to evaluate their progress later this year. 

Thank you, Chairman Nelson, Ranking Member Collins, members of the Committee. I also look forward to responding to whatever questions you may have on this subject. 

[The prepared statement of Mr. George follows:] 

DeShaun on LAP51NQ082 with DISTILLER

30 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 25 here 91167.025
31 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 26 here 91167.026
32 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 27 here 91167.027
33 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 28 here 91167.028
34 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 29 here 91167.029
35 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 30 here 91167.030
36 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 31 here 91167.031
37 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 32 here 91167.032
38 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 33 here 91167.033
39 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 34 here 91167.034
40 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 35 here 91167.035
41 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 36 here 91167.036
42 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 37 here 91167.037
43 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 38 here 91167.038
44 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 39 here 91167.039
45 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 40 here 91167.040
46 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 41 here 91167.041
47 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 42 here 91167.042
48 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 43 here 91167.043
49 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 44 here 91167.044
50 

The CHAIRMAN. Okay. There you have it. Senator Collins and I 

want the members of the Committee to get into it. 

Senator Collins 

Senator COLLINS. Thank you, Mr. Chairman. It is typically gracious of you to allow us to go first. 

Ms. Hossli, I listened to your testimony with a sense of disbelief 

and outrage not only have you been scammed repeatedly, I think 

three years in a row counting this year, and I see you are nodding 

yes. But the treatment that you received from the IRS is so disturbing and unacceptable as you sought help. 

Can you give us any idea of how many different IRS employees 

you have talked to as you tried to get help over the last three 

years? 

Ms. HOSSLI. Dozens. 

Senator COLLINS. Literally dozens. I guess am outraged by that, 

and it speaks to the point that Mr. George just made about there 

being a need for some sort of central hotline or clearinghouse 

where you could go. 

The PIN program that has been described that IRS has implemented is intended to protect people like you who have been victimized repeatedly. Have you received a PIN number yet? 

Ms. HOSSLI. No, ma’am. 

Senator COLLINS. No. So, despite the fact that you have had your 

refund which you desperately need to help pay your medical bills, 

you have had this happen three times, you still have not received 

your PIN number, is that accurate? 

Ms. HOSSLI. No, ma’am. That is correct. 

Senator COLLINS. Mr. George, I just do not understand what is 

going on at IRS and I hope that you can help us understand. I 

know that the National Taxpayer Advocate has been concerned 

that the IRS is moving away from a previous effort to centralize 

customer service in response to identity theft cases like the one 

that Ms. Hossli as described; and now, it apparently is going to create units in 21 different places. Is that accurate? 

Mr. GEORGE. That is accurate in terms of the number of various 

divisions within the IRS that had a role or still have a role to play 

in identity theft. To its credit, the IRS has attempted to consolidate 

their activity as it relates to identity theft so that an individual can 

go to a single office within the IRS. But in this current economic 

environment, Senator, they have to make some tough choices. 

Senator COLLINS. Well, it seems to me this is a perfect example 

where consolidation makes sense. You ought to be able to bring the 

existing resources that you have in 21 different units together in 

one unit so that each person who calls would deal with knowledgeable people, not get different answers, not be told to call back at 

12-ish mountain time and nobody answers. 

Would that not help to consolidate? 

Mr. GEORGE. There is no question about that, and my office will 

be conducting a review of this activity. 

Senator COLLINS. Thank you. 

Ms. Keneally, I understand that the Tax Division has issued a 

directive, number 144—you referred to it, the detective has referred to it—to address stolen identity refund fraud. 

DeShaun on LAP51NQ082 with DISTILLER

51 

It is supposed to improve coordination between the Tax Division 

and the U.S. Attorney Offices all over the country. That is a positive development without a doubt. 

But I guess what I do not understand is given the number of 

hearings that Senator Nelson has held and given the fact that the 

National Taxpayer Advocate has identified identity theft as one of 

IRS’s most serious problems, six times since 2004, why did it take 

so long for the Justice Department to issue this directive and to 

delegate more authority in this area? 

Ms. KENEALLY. Senator Collins, thank you for that question. 

I may not be able to answer that question. I was sworn in to a 

year ago and we issued the directive in September. At the time 

that I arrived, there were active discussions between the IRS and 

prosecutors in my office as to how to address this issue; and as far 

as I know, we moved as quickly as we could and as collaboratively 

as we could to address this issue. 

The directive in many ways reflects how we were handling these 

cases. In any case, it formalized it and put structure around what 

we were doing because this was a fast-growing and fast-moving 

crime. It is my understanding that the Tax Division and the U.S. 

Attorney’s Offices were responding quickly. 

Senator COLLINS. Well, I hope that you really make this a priority. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Warren. 

Senator WARREN. Thank you very much, Mr. Chairman, and 

thank you for your persistent and aggressive leadership in this 

area. Thank you and Ranking Member Collins for holding this important hearing today. 

I also want to thank Ms. Hossli for coming up. I know this is difficult telling your story, how much we all appreciate your being 

here and trying to prevent this from happening to other people. 

Thank you very much for being here today. 

Detective Augeri, I wanted to ask you a question. It sounds like 

from what you are describing in Tampa that basically it was really 

hard to get anything together. You have got a coordinated effort 

and a coordinated effort was much more effective. In other words, 

smarter policing. And, I offer my congratulations on that. 

But there was another aspect that you mentioned in your testimony that I want to ask about and that is the importance of information from victims and from residents in the area. Can you just 

say something more about how important that is to your ongoing 

investigations? 

Mr. AUGERI. The biggest problems that we are experiencing right 

now is the fact that Personal Identification Information, PII, is 

being sold in such large quantities that is fueling this crime. 

It does not appear to have any safeguards in place for these companies that are responsible for protecting this information because 

the people that are dealing this information it is just like they are 

dealing cash because that has a dollar value, a name, a social, a 

date of birth. Without that abundance of information out there, this 

crime gets dramatically reduced along with all kinds of other fraud 

activity. 

DeShaun on LAP51NQ082 with DISTILLER

52 

Senator WARREN. And you hear about these when people call you 

or call the task force with their own cases like Ms. Hossli’s of identity theft? 

Mr. AUGERI. When we get those complaints, obviously they are 

a victim of their own information being stolen. What we are seeing 

from the enforcement side is the interdiction part where arrests are 

made and these quantities of personal identification information 

are seized, and these people have access to this information 

through typically medical connections. 

Senator WARREN. Thank you. The reason I asked about individuals, I actually got some data on this that 150 million calls were 

made to the IRS last year and only 68 percent were answered. Ten 

million letters were received by the IRS but one million received 

no answer from anyone. 

And, the taxpayer protection program received 200,000 identity 

theft calls but only 73,000 of those calls were answered, about a 

third of the calls actually had someone who answered them which 

means the information about identity theft is clearly not fully in 

the system. 

So, I am just concerned about this and I want to put that, when 

I look at the Chairman’s chart, to think about how much bigger it 

might be if we had full information here. 

Ms. Keneally, I wanted to ask you a question. It is my understanding that for every dollar spent in tax fraud enforcement that 

the return to either the U.S. Government or to the taxpayer is $4, 

is that right? 

Ms. KENEALLY. Thank you for that question. If you look at the 

numbers of the Tax Division’s collections and money saved in defending against refund claims over the last five years that number 

averages 14 to 1. 

Senator WARREN. Sorry. So, I had the wrong number. I will 

stand corrected. 

Ms. KENEALLY. And that is without considering our criminal enforcement which we really cannot want to quantify in dollars. 

Senator WARREN. That is right. And it is not considering the 

heartbreak that someone like Ms. Hossli goes through when her 

identity is stolen. 

Ms. KENEALLY. Which is what drives us. 

Senator WARREN. Yes. So, I think about this in the context of sequestration, that right now we are furling workers, halting research, taking children out of head start. The sequestration costs 

$85 billion this year. The IRS estimates, as I understand it, that 

there is about $400 billion left on the table that is not collected, 

money that is fraud or deceit in other ways, about 21 billion of that 

I think the estimate is through identity theft. 

So, here is my question. The IRS is facing an 8 percent cut in 

its budget. Can you just say something briefly, I am about to run 

out of time here, about whether the sequestration is making it 

harder for the IRS to recover money for the American taxpayers 

and for Ms. Hossli? 

Ms. KENEALLY. Senator, thank you for that question. I know on 

this issue in particular this morning I saw in today’s tax press that 

the Acting Commissioner said that he will not cut resources on the 

identity theft issue. 

DeShaun on LAP51NQ082 with DISTILLER

53 

I think there is no doubt the IRS and all of law enforcement will 

need to make some difficult decisions. The Attorney General has 

stated that we will need to make difficult law enforcement decisions in the Department of Justice, and I am certain the IRS will 

be facing the same decisions. We will continue to make identity 

theft a priority. 

Senator WARREN. I appreciate that you make identity theft a priority; but as we think through this question of how we fund our 

government, and we are leaving $400 billion on the table every 

year in tax fraud, the idea of cutting enforcement for the IRS just 

seems to me not to be serious about collecting the money we need 

to run the government. 

So, the next time I hear that the government is broke I will ask 

that you get the money you need to enforce our laws. Thank you. 

Ms. KENEALLY. Thank you, Senator. 

The CHAIRMAN. Senator McCaskill. 

Senator MCCASKILL. Thank you, Senator Nelson. Thank you all 

for being here. 

I want to first share of what I know. You will be diplomatic 

about this, detective; but having been a local prosecutor for many 

years, nothing is more frustrating than when you have a red-hot 

crime and you hear from the Feds, sorry, we cannot share because 

of blah blah blah blah blah. 

And it is always a good different reason as to why we cannot 

share blah blah blah blah. But I know in this instance sharing is 

pretty important because for a while you were stymied by the notion that you were unable to get information because the IRS said 

that it was private taxpayer information. 

Now, you got them to acknowledge a waiver program, and we get 

waivers all the time in our Senate offices to help people with various problems they have with Social Security or veterans benefits. 

We get waivers so we can act on their behalf. 

Do you sense now, and maybe the Inspector General can speak 

to this, is the acknowledgment that a waiver by the taxpayer that 

is the victim, that that is sufficient to get the Criminal Investigation Division of IRS outcome neutral and fully engaged in going 

after this? 

Mr. GEORGE. Yes, Senator, that is the case. We take particular 

pride in helping Congress and helping the IRS get through Congress authorization to share information initially as it related to 

prisoners. You may recall from a few years ago we did work which 

uncovered again an epidemic of people who were incarcerated filing 

false tax returns and receiving tax refunds. 

As a result of that, the IRS instituted a pilot, starting with Florida, which expanded to eight other States, and now it is throughout 

the entire Nation. So, as a result of that, additional information is 

being shared with law enforcement agencies. 

Title 26, Section 6103 puts criminal penalties on me as well as 

the members of Congress, with the exception of the Chairman of 

Finance, Ways and Means, and a couple of other Committees, on 

how taxpayer information can be used with the caveat that you are 

exactly right, if a taxpayer allows someone other than themselves 

to have access to that information, it is permissible. 

DeShaun on LAP51NQ082 with DISTILLER

54 

Senator MCCASKILL. Right. The waiver is very important. Well, 

I am glad that it is now no longer on a pilot basis and it is all over 

the country so we can get the cooperation needed. 

Well, now the IRS has an obligation that clearly they are not 

meeting and they should not be a crime that is only identified by 

people like poor Ms. Hossli coming forward. This needs to be a 

crime that is identified through systems. 

When you have, it is my understanding that we had, in one instance we had, how many thousands of checks were sent to one address in Michigan? Two thousand paper refunds sent to one address. 

Could you explain—I am disappointed, and I want to help you, 

Mr. Chairman, get the IRS here. I do not know why the IRS is not 

here. They need to be here. It is inexcusable that they are not here, 

and I hate to blame the Inspector General for this. 

But how in the world can there not be a system in place that the 

IRS would catch? They were sending 2000 refund checks to one address. 

Mr. GEORGE. Senator, once again, we actually take credit because we identified that problem, that is, Treasury Inspector General for Tax Administration. In their defense, the Internal Revenue 

Service needs a statutory fix in order to limit, at our request, our 

recommendation, the number of returns that are issued to the 

same bank account, debit account, what have you. 

Senator MCCASKILL. No. You have got to be kidding. 

Mr. GEORGE. Well, they do and—— 

Senator MCCASKILL. No. Wait, wait. You are telling me that 

there needs to be a statute to tell the IRS that they need to get 

their criminal investigation involved if they are sending 2000 refund checks to one address? 

Mr. GEORGE. Well, not, the criminal, no, they can investigate. 

Senator MCCASKILL. Well, that is what I am saying. I mean, it 

would be a little bit like if I was running a store and all of a sudden I realize that half my shelves were empty, would I have to wait 

for somebody to do an inventory to tell me I have a problem? 

I mean, if somebody is stealing stuff, it seems to me that when 

the IRS sees, they should have some kind of system check that 

went 2000 checks are going to one address that they would go, huh, 

do you think somebody is ripping us off? Do you think we maybe 

ought to check that address and see what is going on? 

Mr. GEORGE. Senator, that is a very logical reaction; but again, 

and I am not going to defend the IRS, but when I had discussions 

with my own staff about this very situation, I raised the possibility, 

well, could these be accountants, could this be an H&R Block and 

in effect having an escrow account for clients, and is this a possibility? And while I have been told for the most part that is not the 

case, but that was one of the considerations. 

Senator MCCASKILL. But do you not think, I mean, frankly I 

think if you called the local police department in Lansing, I bet if 

the IRS Criminal Investigation Division called you, detective, and 

said, you know, we have got an address that we have sent 2000 

checks to. Could you help us out? 

I guarantee you the local detective would go, yeah, we will check 

it out. And, do you know what they would do? They would go over 

DeShaun on LAP51NQ082 with DISTILLER

55 

there, they would scope it out, they would do a little investigation, 

they would figure out what was going on, and lo and behold, you 

know what they would do? They would catch a criminal. 

Mr. GEORGE. And fortunately, again as a result of our work, that 

has occurred. 

Senator MCCASKILL. So, now when there is 2000 checks going to 

one address, does it trigger some kind of work by the criminal investigations division? 

Mr. GEORGE. It should, but again, they have limited resources, 

Senator, I do not know exactly how they allocate their resources 

and make the determination. 

The IRS has a tolerance level as does the U.S. Attorney’s Office. 

Again, they are dealing with hundreds of millions of tax returns a 

year, trillions of dollars a year, and they—— 

Senator MCCASKILL. Yes, but there are basic systems that could 

be put in place that would trigger basic questions being asked and 

it would not be, especially in this age of technology, it would not 

be an onerous requirements and we will continue to follow up on 

this. I really appreciate the Chairman. If I were the IRS, I would 

be embarrassed about this. 

Thank you, Mr. Chairman 

The CHAIRMAN. The IRS is going to have a chance to explain all 

of this as they did two years ago in a Subcommittee that I chaired 

in Finance. That is going to be another hearing coming up on 16th 

of April in the Finance Committee, which has jurisdiction over the 

IRS. 

One of the issues in front of the Committee at that time will be 

the legislation that is filed that I would encourage the members of 

the Committee to sponsor, and I am very proud of this Committee 

just by what you have seen. We have got a bunch of bulldogs on 

this Committee which is, it is just a privilege to be a part of it with 

you all. 

Senator Donnelly. 

Senator DONNELLY. Thank you, Mr. Chairman. 

To follow up on what my colleague was talking about, and, Ms. 

Hossli, thank you for being here. Detective, thank you for your 

hard work and thank you to the other witnesses. 

I am not a software expert but it would seem to me that, you 

know, this would be something having 2100 go to the same address 

that it would clearly collect that there is a problem and that a simple software feature could detect that immediately to Mr. George 

or to Ms. Keneally. 

Am I heading down the wrong road with that? 

Mr. GEORGE. We first recommended in 2008 that the IRS limit 

the number of refunds that they submit to the same account. They 

indicated that in some instances it was legitimate. Again, and I 

will have to allow them to speak for themselves to explain that justification. 

They have instituted filters, in effect software, an algorithm, to 

help determine when things are suspect. They are aware of the 

problem, but it is a growing problem. 

This is the problem of the 21st century, Senator, and it is not 

limited to the United States. It is an international problem. So, 

they need cooperation from nations all over the world. As you 

DeShaun on LAP51NQ082 with DISTILLER

56 

know, in this environment there are nations that are not going to 

cooperate with us. 

Senator DONNELLY. Do you know, and again to Ms. Keneally or 

to Mr. George, is there some kind of feature that can make it so 

that the IRS knows it is, in fact, this person who sent the return 

whether it is a PIN number as Ms. Hossli was talking about, a 

simple feature like that, a 10-, 11-, 12-digit PIN number or a mix 

of numbers and alphabetical letters to know that, if I file my return in April, somebody with the appropriate number, is there a 

way to do that? 

Mr. GEORGE. Is there a way? Yes. 

Senator DONNELLY. Okay. 

Mr. GEORGE. But the absurdity, Senator, of all of this is the IRS 

has to rely on information provided by the taxpayer. So, if a criminal takes over the identity of an honest taxpayer, especially someone who does not have a filing requirement—— 

Senator DONNELLY. And they would really need to know would 

be the Social Security number and the address? 

Mr. GEORGE. But the irony is the criminal can change the address so that the IRS communicates with the criminal and not with 

the legitimate taxpayer. 

Senator DONNELLY. So, if all you have is a Social Security number and a person’s name, you can file a tax return for that? 

Mr. GEORGE. That is correct. And you do not actually even need 

a Social Security Number. The IRS issues what is called an ITIN, 

an Individual Taxpayer Identification Number. This is for people 

who do not have Social Security Numbers and yet have a tax filing 

obligation. 

Senator DONNELLY. And the whole idea is to try to be the first 

in the door? 

Mr. GEORGE. Exactly, which was pointed out by the Chairman 

earlier. Yes. 

Senator DONNELLY. Detective, is this something that—you indicated Tampa is ground zero. Is this something that in Tampa different groups work together with each other in coordination that, 

hey, this is the system we have used. It has really worked well to 

get us additional funds; and then another group uses it? And has 

it become, in effect, almost a learning center for the entire country 

or do they coordinate, these groups? 

Mr. AUGERI. They do coordinate. They network. If there are submissions that are being sent and being rejected, once a new scheme 

is set up, they kind of share that information so they can get the 

submission accepted by the IRS. 

Senator DONNELLY. Ms. Keneally, is there any screen or system 

that you have that can determine that that return is, in fact, from 

that taxpayer when it comes in? 

Ms. KENEALLY. Senator, I am with the Department of Justice 

and we prosecute after the crime occurs. 

Senator DONNELLY. Yes. 

Ms. KENEALLY. I do know that we make every effort to make 

sure that the IRS gets the information that we have. When we are 

prosecuting these cases and we have a list of victims, we make sure 

that the IRS has that information to tag those accounts. 

DeShaun on LAP51NQ082 with DISTILLER

57 

I will reiterate. The IRS is working constantly on its filters. We 

try to get them the information they need concerning the patterns 

that we are seeing and they have their own fraud development centers on patterns. 

We make every effort to try to prevent what happened to Ms. 

Hossli that if someone is the victim in one year that everything is 

tagged so they will not be a victim in future years. 

Senator DONNELLY. Mr. George, do you know of any way that the 

IRS can verify this return, in fact, came from that taxpayer? 

Mr. GEORGE. There are a number of ways that it can be done, 

sir, but if I may again just jump to something that the IRS itself 

has requested for years, and we at TIGTA have recommended, if 

the IRS were able to gain access to what is called the National Directory of New Hires, which is maintained by the Department of 

Health and Human Services, which in effect is a very complete 

index of individuals who start or at least claim to have started new 

jobs. If the IRS were able to compare the information about who 

claims to have a job with the information that is subsequently submitted to it in terms of what amount of money they are supposedly 

earning and the like, that matching of information would significantly assist the IRS in addressing this type of problem. 

Senator DONNELLY. I want to thank the entire panel. Thank you 

for your attendance here, and thank you, Mr. Chairman. 

The CHAIRMAN. Any of you who have any follow up, I am going 

to wrap up here pretty quick and I just point out to the Inspector 

General that, as you share with IRS and I will certainly do this in 

the hearing coming up on tax day, middle of April, that many companies always verify a change of address; and so, since the 

fraudster can just say, well, change my address to a new address 

and the IRS is not verifying that, then it just lends all the more 

to this opportunity. 

When you add to that what we heard in the Jamaican scam 

where they can send it to one of these cards, a debit card, then that 

just makes it all the more difficult to locate and to identify the 

fraudster. 

And this is where the Tampa Police Department has done such 

a great job. First of all, they had to go through all of this and work 

it with the IRS to get a waiver so that poor victim could say I 

waived my rights, you can share my personal tax information with 

the police department so they can go catch the bad guy. And that 

is the way they have been able to get it. 

And as you said, Mr. George, this first thing started in the prisons and again it happens for some reason in Florida and it was 

prisoners in the State prison system that were filing false tax refunds and getting the money. And they are in prison. 

And so, what they did was they got the waiver from the victims 

and they pretty well snuffed that out in the prisons. Now, we have 

got to snuff it out here. 

Senator Collins 

Senator COLLINS. Thank you, Mr. Chairman, for holding this 

hearing as it is absolutely outrageous. 

I agree with your comments, with Senator McCaskill’s point 

about that the IRS ought to be embarrassed that sending out thousands of refunds to the same address and that is not caught, that 

DeShaun on LAP51NQ082 with DISTILLER

58 

a victim like Ms. Hossli cannot get a PIN number to protect her 

and has to deal with dozens of people at IRS, none of whom really 

help you, that just outrages me. 

An issue also that we also need to look at is the use of the Social 

Security number on Medicare cards that are then available to all 

sorts of healthcare providers. I know that for years we have been 

told it is too expensive to convert but certainly from hence forward 

we could stop using the Social Security number on Medicare cards. 

I just think there is so much that can be done and I really applaud you for your leadership on this and look forward to working 

with you and our other committee members. 

Thank you. 

The CHAIRMAN. Senator McCaskill, Senator Donnelly. 

Ms. HOSSLI. Senator, may I? 

The CHAIRMAN. Yes, ma’am. 

Ms. HOSSLI. I just wanted to say that I did contact the Attorney 

General’s Office as well and they said that there was nothing that 

they could do. I have a question. 

Why is it that every doctor’s office you walk into the first thing 

they ask you for is your Social Security number. Why is that not 

part of HIPAA laws? 

Your Social Security number is your identity. It is your sole and 

nobody should have access to that number. 

The CHAIRMAN. I think that is a very legitimate question and we 

are asked as citizens to give our Social Security number in cases 

over and over that it is not required because it is just another invitation out there that someone is going to steal your identity. 

Now, Ms. Hossli, if you would come with me after the meeting, 

we are going to get you with the IRS and we are going to see if 

we can get your problems solved. No one should have to go through 

what you have gone through. 

And I just want to thank the witnesses. You have been excellent. 

I want to thank our Committee members. Your participation is just 

extraordinary. 

Thank you and the meeting is adjourned. 

[Whereupon, at 3:27 p.m., the Committee adjourned.] 

DeShaun on LAP51NQ082 with DISTILLER

(59) 

APPENDIX 

DeShaun on LAP51NQ082 with DISTILLER

60 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 1 here 91167.001
61 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 2 here 91167.002
62 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 3 here 91167.003
63 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 4 here 91167.004
64 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 5 here 91167.005
65 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 6 here 91167.006
66 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 7 here 91167.007
67 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 8 here 91167.008
68 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 9 here 91167.009
69 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 10 here 91167.010
70 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 45 here 91167.045
71 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 46 here 91167.046
72 

Æ 

DeShaun on LAP51NQ082 with DISTILLER


Insert offset folio 47 here 91167.047