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75–283—PDF 2011

S. HRG. 112–491 

THE SPREAD OF TAX FRAUD BY IDENTITY THEFT: 

A THREAT TO TAXPAYERS, A DRAIN ON 

THE PUBLIC TREASURY 

HEARING 

BEFORE THE

SUBCOMMITTEE ON FISCAL RESPONSIBILITY 

AND ECONOMIC GROWTH 

OF THE

COMMITTEE ON FINANCE 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

MAY 25, 2011 

( 

Printed for the use of the Committee on Finance 

COMMITTEE ON FINANCE 

MAX BAUCUS, Montana, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

KENT CONRAD, North Dakota 

JEFF BINGAMAN, New Mexico 

JOHN F. KERRY, Massachusetts 

RON WYDEN, Oregon 

CHARLES E. SCHUMER, New York 

DEBBIE STABENOW, Michigan 

MARIA CANTWELL, Washington 

BILL NELSON, Florida 

ROBERT MENENDEZ, New Jersey 

THOMAS R. CARPER, Delaware 

BENJAMIN L. CARDIN, Maryland 

ORRIN G. HATCH, Utah 

CHUCK GRASSLEY, Iowa 

OLYMPIA J. SNOWE, Maine 

JON KYL, Arizona 

MIKE CRAPO, Idaho 

PAT ROBERTS, Kansas 

MICHAEL B. ENZI, Wyoming 

JOHN CORNYN, Texas 

TOM COBURN, Oklahoma 

JOHN THUNE, South Dakota 

RICHARD BURR, North Carolina 

RUSSELL SULLIVAN, Staff Director 

CHRIS CAMPBELL, Republican Staff Director 

SUBCOMMITTEE ON FISCAL RESPONSIBILITY AND ECONOMIC GROWTH

BILL NELSON, Florida, Chairman 

MAX BAUCUS, Montana 

KENT CONRAD, North Dakota 

JEFF BINGAMAN, New Mexico 

MIKE CRAPO, Idaho 

TOM COBURN, Oklahoma 

RICHARD BURR, North Carolina 

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Nelson, Hon. Bill, a U.S. Senator from Florida, chairman, Subcommittee 

on Fiscal Responsibility and Economic Growth, Committee on Finance ........ 1 

WITNESSES 

Hawa, Sharon, Bronx, NY ....................................................................................... 3 

McClung, Terry, Jr., Finksburg, MD ..................................................................... 5 

Victim of identity theft, Miami, FL ........................................................................ 6 

Olson, Nina E., National Taxpayer Advocate, Internal Revenue Service, 

Washington, DC ................................................................................................... 12 

White, James R., Director, Tax Issues, Government Accountability Office, 

Washington, DC ................................................................................................... 14 

Tucker, Beth, Deputy Commissioner, Operations Support, Internal Revenue 

Service, Washington, DC ..................................................................................... 16 

ALPHABETICAL LISTING AND APPENDIX MATERIAL 

Hawa, Sharon: 

Testimony .......................................................................................................... 3 

Prepared statement .......................................................................................... 29 

McClung, Terry, Jr.: 

Testimony .......................................................................................................... 5 

Prepared statement .......................................................................................... 34 

Nelson, Hon. Bill: 

Opening statement ........................................................................................... 1 

Prepared statement .......................................................................................... 37 

Olson, Nina E.: 

Testimony .......................................................................................................... 12 

Prepared statement .......................................................................................... 40 

Tucker, Beth: 

Testimony .......................................................................................................... 16 

Prepared statement .......................................................................................... 53 

Victim of identity theft: 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 62 

White, James R.: 

Testimony .......................................................................................................... 14 

Prepared statement .......................................................................................... 65 

COMMUNICATION

Ellingson, Robert E. ................................................................................................. 81 

(III) 

(1) 

THE SPREAD OF TAX FRAUD BY IDENTITY 

THEFT: A THREAT TO TAXPAYERS, 

A DRAIN ON THE PUBLIC TREASURY 

WEDNESDAY, MAY 25, 2011 

U.S. SENATE,

SUBCOMMITTEE ON FISCAL RESPONSIBILITY

AND ECONOMIC GROWTH, 

COMMITTEE ON FINANCE, 

Washington, DC. 

The hearing was convened, pursuant to notice, at 2:07 p.m., in 

room SD–215, Dirksen Senate Office Building, Hon. Bill Nelson, 

(chairman of the subcommittee) presiding. 

Also present: Ryan McCormick, Legislative Assistant; Mike 

Quickel, Senior Policy Advisor. 

OPENING STATEMENT OF HON. BILL NELSON, A U.S. SENATOR 

FROM FLORIDA, CHAIRMAN, SUBCOMMITTEE ON FISCAL RESPONSIBILITY AND ECONOMIC GROWTH, COMMITTEE ON FINANCE 

Senator NELSON. Welcome. This is the first of several hearings 

on the newly created Senate Finance Subcommittee on Fiscal Responsibility and Economic Growth. The subcommittee is charged 

with examining how major revenue and expenditure policies affect 

our economic outlook and the prospects for long-term growth. The 

subcommittee’s jurisdiction also extends to management of the public debt and Treasury Department operations. Broadly speaking, 

the subcommittee is concerned with the efficient allocation and 

management of taxpayer dollars. 

Our ranking member is Senator Crapo. He is tied up in another 

meeting. He will be here before the end of the hearing and has 

asked me to go ahead and proceed. 

The Fiscal Responsibility and Economic Growth Subcommittee 

will look at the big-picture trends related to spending revenue, deficits, as well as the narrower issues that involve government waste 

and inefficiency in programs or agencies that fall under the jurisdiction of this overall Finance Committee; thus, the topic of today’s 

hearing. 

Even in the best of years, the income tax filing process is sometimes an unwelcome event for millions of taxpayers required to 

navigate the ins and outs of a complex tax code. But, for an increasing number of taxpayers, the initial preparation of an income 

tax return may be just the beginning of an extended nightmare 

that can continue for months, or even years, because victims of taxVerDate Nov 24 2008 19:58 Aug 03, 2012 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 R:\DOCS\75283.000 TIMD
2 

related identity theft are the casualties of a system ill-equipped to 

deal with the growing proficiency and sophistication of today’s tax 

scam artists. 

Just since 2008, the IRS has identified 470,000 incidents of identity theft affecting more than 390,000 taxpayers. That is a high 

number. And, while the IRS reports that it has stopped over $1 billion in fraudulent refund claims, there is no reliable estimate of 

how much it has disbursed to criminals, to scam artists, and to 

other fraudsters. 

For individual taxpayers, a Social Security number is the key to 

unlocking and accessing the Federal tax system. At one time, Social Security numbers had a sole purpose: facilitating participation 

in the Old Age, Survivor’s, and Disability Insurance program. But 

in today’s modern wired world, Social Security numbers are shared 

with little thought almost anytime a private or public entity requests a unique, exclusive number to identify and track a customer 

or a client. 

In short, the keys to the tax system have been copied many times 

over. It should come as no surprise then that, when our tax system 

is bombarded with sham returns that use stolen names and stolen 

Social Security numbers, they are going to be claiming fraudulent 

tax refunds. 

With the ease with which the scam artists can readily file electronic tax returns, the availability of prepaid debit cards and other 

hard-to-trace options for the delivery of tax refunds, and the low 

risk that criminal sanctions or penalties will be imposed, it has created in many respects the perfect crime, but for the victims caught 

in the middle of these schemes. Tax-related identity theft imposes 

extraordinary burdens and economic hardship, as we will hear from 

our first panel of witnesses. 

Taxpayer victims spend countless hours obtaining the necessary 

documents to prove who they are. Inconsistent messages and conflicting instructions from customer service agents at the IRS can 

worsen the situation. Innocent taxpayers whose identities have 

been stolen frequently find themselves in a confusing and frustrating forum of bureaucratic ping pong and bureaucratic runaround. 

Last month, following several recent reports of tax-related identity theft schemes in Florida, I asked the Treasury Inspector General for Tax Administration to launch a new investigation into this 

issue. That work is under way, and this committee looks forward 

to those findings. 

We have also been working with several of our colleagues to 

strengthen the information-sharing program to crack down on the 

tax scams by prison inmates, which often involve stolen identities. 

Legislation to extend that program will be needed, and we are 

going to be working in this subcommittee to get it done. 

The purpose of our hearing today is to investigate the growing 

problem of tax fraud through identity theft. First, we will hear 

from taxpayers who have fallen victim to complex identity-related 

tax scams. Their stories are naturally heart-tugging. 

The second panel, which includes the Taxpayer Advocate, the Director of Tax Issues at the Government Accountability Office, and 

the Deputy IRS Commissioner, will explore the scope and magVerDate Nov 24 2008 19:58 Aug 03, 2012 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 R:\DOCS\75283.000 TIMD
3 

nitude of identity theft in the tax system and examine the laws, 

regulations, and administrative practices that are in place to prevent the processing of fraudulent tax returns and trying to protect 

these victims. 

The hearing testimony will help guide the development of new 

legislation to crack down on tax fraud and to shield victims from 

further hardship. I fully expect this first hearing on this issue to 

lay the groundwork for congressional action and to generate novel 

ideas for a legislative initiative to aggressively combat the growing 

problem of tax-related identity theft. 

[The prepared statement of Senator Nelson appears in the appendix.] 

Senator NELSON. So I want to welcome our first panel. Ms. Sharon Hawa is from Bronx, NY; Mr. Terry McClung is from Maryland; 

and we have a victim of identity theft from my home State of Florida, from Miami. These witnesses are our first panel, and then we 

will go to the second panel, which will be our National Taxpayer 

Advocate, a representative Director on Tax Issues from the GAO, 

and then the Deputy Commissioner in the IRS. 

When Senator Crapo arrives, I will of course recognize him for 

his comments. But he is in another very important meeting at the 

time, and I expect him to get here not until the tail end of our 

meeting. 

So let us just start in the order in which I introduced you all. 

Do you want me to call you Ms. X, or Madam X, or Miss X? Otherwise, one of our victims. So, Ms. Hawa, would you please start? 

STATEMENT OF SHARON HAWA, BRONX, NY 

Ms. HAWA. Good afternoon, Mr. Chairman. Thank you for allowing me this opportunity to provide you with my testimony regarding this atrocious and rapidly increasing identity theft crime. 

It not only impacts individual livelihoods, but it also steals millions of dollars from the U.S. Treasury year after year and will continue to do so until something is done to prevent it. 

This unfortunate situation has taken a tremendous emotional 

toll on me. The stress, fear, and anxiety are all compounded by 

having to deal with terribly organized agencies, such as the IRS, 

and the Taxpayer Advocate Service, which only adds to feeling victimized by their inefficient systems and lack of communication. 

Knowing that I, and other legitimate taxpayers like me, remain 

vulnerable tax season after tax season both infuriates and frustrates me. In 3 years, thieves managed to steal my tax refunds 

twice by filing fraudulent tax returns in my name. The first time 

was in 2009, after I filed through my local tax preparation office 

as I had for the previous 5 years. 

Two days later, I received word from the IRS that they rejected 

my return because my Social Security number was used more than 

once. Scared and in shock, I immediately took measures to try to 

secure all of my personal assets, my credit reports, and my accounts. I obtained a police report. I filed with the Federal Trade 

Commission. I mailed in hard copies of my returns to various IRS 

addresses, as instructed by different units within the IRS. 

After 12 months of back-and-forth, the IRS’s Identity Protection 

Specialized Unit assigned me to an incredibly rude and hard-toVerDate Nov 24 2008 19:58 Aug 03, 2012 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 R:\DOCS\75283.000 TIMD
4 

reach taxpayer advocate. I had to explain my situation, resubmit 

my documents, and prove my identity all over again. It took a 

painstaking 14 months until I finally received my $6,604 refund. 

Meanwhile, I had to take on a second job to support myself and 

spent a lot of time, money, and energy drafting letters and sending 

the necessary information. 

In 2010, I was unaffected, but I still remained extremely anxious. 

When I finally received both my 2009 and 2010 tax refunds a few 

weeks apart, I hoped the worst was over. But this year I learned 

that I had fallen victim to this crime yet again, and this time they 

also stole my State refund, together totaling $6,335. 

Research has shown me how antiquated the taxpayer system is. 

I realize that the IRS has been dealing with this crime nearly since 

the start of the millennium, so why do they seem so inexperienced 

and incompetent in handling the matter, and why has nothing been 

done to combat it? 

The very process designed to accommodate taxpayers has been a 

windfall for thieves. There has been an increase in tax theft as a 

result of e-filing and direct deposit, which do not necessitate validating personal identity when filing. A digital signature to e-file 

simply requires a Self-Select Personal Identification Number, 

which is the taxpayer’s adjusted gross income from their previous 

year’s return, information that is easily obtainable. 

Furthermore, direct deposit only requires a bank’s routing number in order to release the funds, so no further vetting of personal 

information or identity is required. So, on two separate occasions, 

identity thieves e-filed early in the tax system before I even physically received my W–2 forms, and they used direct deposit accounts to steal my refunds. To make matters worse, in 2009 they 

received about $1,895 more than I was due, and I received a notice 

from the IRS stating that I owed that money back in over-payment! 

Electronic filing was created to save the IRS millions of dollars, 

since e-filed returns cost the IRS 19 cents, versus a paper return 

which costs $3.29. But I urge you to look at the many millions of 

dollars fraudulently paid out to these criminals. Cases jumped 644 

percent from 2004 to 2007, an additional 300 percent since last 

year. And many millions of taxpayer dollars are needlessly and disgustingly wasted due to this broken and exposed system. 

In an era where technology is so prevalent, one would hope that 

priority would be placed on this issue. It is absolutely absurd to me 

that the government pays out twice on a single stolen refund, multiplied by hundreds of thousands of stolen refunds each year. 

Since the country is facing one of the worst economic situations 

in its history, this appalling travesty needs immediate attention 

and repair. This entire ordeal is in large part due to the unacceptable lack of security measures that the IRS and the U.S. Government have placed on the personal identities of taxpayers. 

As an upstanding citizen of this country, I demand change. I demand first that legislation be enacted to force Federal and State 

tax offices to put appropriate measures in place that prevent 

thieves from taking the people’s hard-earned refunds away from 

them and forcing them to fight for their identity and their tax refunds year after year, and for the rest of their lives. 

5 

I, second, demand that the Federal Government work more closely with State and local law enforcement agencies to target and 

catch these criminals, and I, third, demand that each State develop 

and enact the necessary laws to protect consumers from corporate 

tax preparation offices that have few incentives to safeguard their 

customers’ personal information. 

Thank you for your time and effort in making these critical 

changes happen now. I appreciate your ear. 

Senator NELSON. Thank you, Ms. Hawa. 

[The prepared statement of Ms. Hawa appears in the appendix.] 

Senator NELSON. Mr. McClung? 

STATEMENT OF TERRY McCLUNG, JR., FINKSBURG, MD 

Mr. MCCLUNG. Thank you, Senator. 

On December 3, 2008, my family experienced the highest of 

highs: my wife Stephanie, seated behind me, gave birth to our 

beautiful daughter Kaitlyn. On May 6, 2009, we felt the lowest of 

lows: our happy, healthy 5-month-old daughter died due to Sudden 

Infant Death Syndrome, SIDS. Losing a child, especially so unexpectedly, is every parent’s worst nightmare. Thankfully, we found 

some support from other SIDS families that we have met in an online support group. 

It was through that group that we first learned of a pretty despicable act. In 2010, several people posted that their 2009 tax returns were rejected because someone had already claimed their babies. Some of these people were already struggling financially and 

were counting on that refund. Some still had funeral expenses to 

pay. One family paid their tax preparer a total of $450 because of 

all this. In total, just through that online support group, we know 

of eight families throughout the country who had their taxes rejected for the same reason. 

Stephanie and I e-filed on the evening of February 16. I woke up 

the next day to two new e-mails stating that both our Federal and 

State tax returns were rejected because ‘‘the dependent’s Social Security number cannot appear in more than one tax return.’’ I made 

countless phone calls that day without much progress. When I 

called the IRS, I was told I had to talk to the Social Security Administration. 

When I called the Social Security Administration, I was told I 

would have to deal with the IRS. I called every phone number I 

was given and that I could find, retold my story more times than 

I care to remember, and filled out an identity theft report. After a 

whole day of spinning wheels, I finally found out how the process 

would work. We had to submit paper returns instead of e-filing, 

and we would still get our refund. 

By sometime within the next year, both we and whomever else 

claimed Kaitlyn would receive a letter stating that whichever one 

of us had mistakenly claimed her would have to file an amended 

return. We received that letter on November 3rd. If neither one of 

us amended our return, we would both get another letter requesting proof that Kaitlyn was our dependent. As long as the other person amended their return, this would all go away and that person 

would not have to pay any penalty or face any consequences. 

Learning that made all this more sickening. 

6 

That same day we learned about the Social Security Death Index 

on Ancestry.com, the first result if you Google that phrase. In mere 

seconds, anybody in the world can access Social Security numbers 

and other personal information for anyone in their database, which 

today includes almost 90 million records. Of course, Kaitlyn is in 

that database. Every other family who had their taxes rejected 

found their deceased babies on there as well. 

I e-mailed a complaint that Kaitlyn’s information was posted 

without our consent. Two days later, I received a generic response 

stating that the list is ‘‘published by the Social Security Administration, and we post records of this kind on our website as we receive them.’’ 

We contacted the I–Team at WBAL–TV in Baltimore to see if 

they could help us get to the bottom of this. Lisa Robinson suggested we contact Dick Myers in Senator Mikulski’s office. He 

quickly put me in touch with the Baltimore Taxpayer Advocacy office. I gave them the link to the Ancestry.com database and the list 

of the victimized families we knew. I had at least a dozen phone 

calls back and forth with the advocacy office, but the little bit of 

information they could give us came in slowly. 

In July, our contact told us that they had discovered that three 

of the eight cases were all filed by the same tax preparer, and that 

the others were all prepared in the same State. The IRS had 

opened a Federal investigation, and that is the last information we 

were allowed to be told. This past October I was contacted by Patricia Farrie in the IRS Office of Privacy, Information Protection, and 

Data Security. They are investigating our cases as well. 

Our story aired on WBAL–TV on March 31. I have spoken with 

journalists in Cincinnati, Atlanta, and Charlotte who have produced similar stories. A national reporter from NBC News contacted me as well. They have all received little or no response from 

the IRS. To this day, we do not know what if anything has come 

out of this. We hope the person who stole our innocent daughter’s 

Social Security number will pay the consequences, but, from what 

we have been told, that is doubtful. 

If anything does ever come out of these investigations or my testimony for this hearing, it will not change anything we have gone 

through. But Stephanie and I, and all the other victims, can only 

hope that the IRS will get tougher on these criminals and prevent 

future families from having to go through all this on top of the anguish of losing a child. 

Thank you for your time and attention. 

Senator NELSON. Thank you, Mr. McClung. 

[The prepared statement of Mr. McClung appears in the appendix.] 

Senator NELSON. Ms. X? 

STATEMENT OF A VICTIM OF IDENTITY THEFT, MIAMI, FL 

Ms. X. Thank you. Thank you, Senator. Thank you for the opportunity. 

On December 1, 2010, around 2:30 p.m., I stopped at a gas station in Miami. As I was pumping gas, my handbag was stolen from 

my car with both mine and my daughter’s Social Security numbers, 

as well as my driver’s license, home address, credit cards, et cetera. 

7 

Very concerned about my daughter’s safety and my own, even 

after taking all possible precautions from that day on, I started 

calling the police to give them updates on numerous fraud attempts 

to my accounts. Through the end of December, there was no detective assigned to my case. The day I went to the police station to 

meet Detective Alce, I was informed by another police agent that 

I should be prepared to face fraud on my upcoming taxes. The 

agent who was alerting me had also been robbed and experienced 

tax fraud for many years. 

Entering January 2011, my concern was to avoid a more serious 

crime. I contacted the IRS to alert them that my daughter and I 

were victims of identity theft and to place an alert regarding my 

2010 tax return. The IRS has a web page on identity theft explaining how to prevent fraud. They request proof of identity and an affidavit. 

By January 11—and not March as my statement shows—that 

was a mistake—I sent out all the required documents and also 

called the IRS to follow up. On February 9, upon the arrival of my 

W–2, my accountant filed my taxes electronically, only to receive 

a message stating that my taxes had already been filed. I immediately called the IRS to report what I understood was a fraud and 

to ask for help in correcting it. The response I got was that it was 

going to be a long wait, and that I had to send my taxes via mail, 

along with a new affidavit and proof of identity. 

This case was a clear fraud. Someone in Miami had filed taxes 

under my Social Security number and had already received a 

check. Nobody could explain why my previous alert and affidavit 

did nothing to prevent the fraud. Along with my personal efforts, 

Senator Nelson’s office was open to listen to my case and help with 

directing it to the right hands. 

By the end of February, I received a call from the IRS Advocate’s 

representative who was going to direct my case to another representative. She was sympathetic to my case due to the fact she 

had also been a single mother, and that, added to identity theft, 

was too much to take. She then changed the code on my case in 

order to expedite it. 

On March 22, the assigned advocate called me requesting new 

copies of my tax file and telling me to wait for updates. On April 

7, I received my tax return check for $4,299, and my case was 

closed. 

On April 15, I received a letter from the IRS documenting the 

fraud and alerting me on identity theft. I was also informed that 

the 3-year identity theft indicator would be attached to my account. 

I hope the indicator will help protect my account, but I am also 

aware of the delay it will cause on my tax return. I heard about 

the PIN number that will be issued by the IRS to identity theft victims, but so far I do not have a clear answer on how it works or 

how to get one. 

From police leads that were never followed, a criminal who was 

never caught, a Social Security number that has become a major 

concern, banks that still cannot guarantee the account’s safety, financial institutions that still rely on Social Security numbers as a 

master proof of identity, taxpayers that pay for criminals’ fraudulent tax returns, nothing is really in place to protect the honest citVerDate Nov 24 2008 19:58 Aug 03, 2012 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 R:\DOCS\75283.000 TIMD
8 

izen from a fast-growing crime such as identity theft, which is good 

for the criminals who are taking full advantage of this scenario to 

take money from hardworking people. Thank you. 

[The prepared statement of Ms. X appears in the appendix.] 

Senator NELSON. Let me ask you, Ms. X, did you expect the IRS 

would take the extra precautions with your taxpayer account? 

Ms. X. Yes, I did. 

Senator NELSON. And because of this special person whom you 

got who had been through a similar situation, they responded to 

you fairly quickly. 

Ms. X. Exactly. 

Senator NELSON. In your case, the identity thief actually opened 

a residential electricity account with the electric company and a 

landline phone using your Social Security number. Is that correct? 

Ms. X. They actually added an address to my electric bill, yes. 

I reported this address to the police, and so far nothing has happened to it. I had the landline also that was recorded by Bloomingdale’s, as they tried to defraud my account with Bloomingdale’s. 

Senator NELSON. But, in this particular case, the thief actually 

opened a residential electricity account and a landline phone using 

your Social Security number. 

Ms. X. It was linked to my account. They did not open a new account, they added an address to my existing account. 

Senator NELSON. Was it an accurate address of the thief? 

Ms. X. I do not know. I reported it to the police, hoping for an 

investigation. The answer I got from the detective was that they 

had been there once. There was furniture in there. They did not 

have time to go back and check and really talk to whoever lived 

there because they had so many cases in their hands. 

Senator NELSON. Were you ever referred to the IRS Identity Protection Specialized Unit by anyone in the IRS? 

Ms. X. I have the letter that was sent to me acknowledging the 

fact that I had been a victim of fraud that comes from, exactly, the 

Identity Theft team. But the contact with them is also difficult, because, for instance, I asked them to check on my daughter’s situation and if there was any fraud related to her Social Security number, and they could not inform me of that. They could not inform 

me about a safe PIN number that could be issued. But apparently 

they are handling the case, yes. 

Senator NELSON. Apparently you also contacted the Secret Service because they investigate financial and electronic-related crimes. 

What did they tell you? 

Ms. X. They told me they could not touch the case, even with all 

the leads I had, until the IRS itself would send them a file, would 

send them the case. So, until then, they could not really do anything, follow any lead, including the address I had in my hands 

where the check, the IRS check, went to. 

Senator NELSON. And, to this point, you do not know if any of 

the local officials or the IRS has gone and pursued this case 

against the thief? 

Ms. X. No. I know the police have closed the investigation on my 

case, and nothing else has been done as far as I know. 

Senator NELSON. So somebody has taken your identity and filed 

a false IRS claim, as well as they have opened an electricity acVerDate Nov 24 2008 19:58 Aug 03, 2012 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 R:\DOCS\75283.000 TIMD
9 

count and a phone account, and all of that is being done in your 

name. At this point you are not sure if the authorities have gone 

after this person? 

Ms. X. No. Actually, my impression is that nothing has been 

done to prevent further action. I have been fighting against this. 

I have been working on the subject nonstop. I have phone calls that 

last forever, very frustrating attempts to even change my Social Security number, which they tell me I cannot do because there is so 

much history attached to it, unless something really terrible happens, which makes me question—so do I have to wait till I am financially broke to finally get a new Social Security number? My 

daughter’s number also cannot be changed for a new one. I do not 

get any solution from anybody in the meantime. 

Senator NELSON. Do you think, aside from your daughter’s identity, that your identity, now that you have been helped by this 

helpful IRS agent who took some concern directly, do you think 

that your identity is now secure at the IRS? 

Ms. X. No, not at all. I have been trying to find out about this 

PIN number that would make my next tax return safe. That is 

what I understand, that the number would have to be matched to 

the number they have once they receive the return, otherwise it 

would not be valid. Nobody can give me an exact answer on this. 

So, no. I know there is an alert on my account now, but I do not 

feel that is going to do it, no. 

Senator NELSON. Well, I wanted to start my questioning with 

your case first because you found a helpful IRS agent who jumped 

on it and helped you immediately, and yet you are still in limbo. 

Ms. X. Yes. 

Senator NELSON. You do not know what is going to happen. You 

do not have any idea if the person has been caught, prosecuted, 

jailed, whatever. You do not have any idea. 

Ms. X. Yes, I imagine. 

Senator NELSON. And somebody is running around masquerading 

with your identity. 

Ms. Hawa, let me ask you, would you describe to the committee 

the economic hardship that you have experienced as a victim of 

this tax identity theft? 

Ms. HAWA. Sure. Well, in 2009 was when my organization—I 

work for a nonprofit organization—starting doing a lot of cuts with 

regard to salary and all that, so I was really relying on my tax refund to try to pay off some bills so I would not accrue more interest 

on my credit card statements, and really try to get ahead of the 

game. 

But unfortunately, with this tax identity theft issue, it really just 

put a damper on things. I was really concerned about what my 

long-term credit report would be because I knew that I would default on some credit card payments. 

This year it has been magnified twice over. I am still waiting for 

my IRS refund. My State refund just came last week, but I am still 

waiting for my IRS refund. I am in a similar situation, if not worse. 

I am about to potentially be laid off from my place of employment, 

and it really just scares me because I think that it is going to continue to happen. I mean, I have no faith right now that the IRS 

10 

is doing anything to combat this issue. This is the second time in 

3 years. 

Senator NELSON. In the first case, it was, you were looking for 

a 2008 calendar-year income tax refund, and you waited 16 months 

before you finally got it. What was the message that you were getting from the IRS while you were waiting? 

Ms. HAWA. Well, I called the IRS probably about 60 times 

throughout that entire 14- to 16-month time frame, and it was the 

same story: we are looking into it. We are looking into it. We are 

looking into it. I was never assigned anybody until the 12th month. 

Senator NELSON. So you had multiple people whom you had to 

deal with? 

Ms. HAWA. Every single time I called, I would get a different 

agent and would have to start the entire process of explaining who 

I was and what happened all over again. 

Senator NELSON. Do you have any evidence of action that the 

IRS took to go after the thief who filed your fraudulent return 

using your name? 

Ms. HAWA. None. Zero. In fact, I was given the routing number 

from the 2008 tax season. I was given the routing number, the 

date, and the amount of the refund that was fraudulently filed. I 

found the routing number belonged to a bank in New York City, 

called the bank, found out that they had video surveillance of that 

amount being withdrawn, gave it to the New York City Police Department. They subpoenaed the bank, had video of the person, and 

nothing was done to capture this individual. According to the New 

York City Police Department, because the case became a Federal 

case rather quickly, they were pulled from it, and they were no 

longer allowed to pursue the individual. 

Senator NELSON. Over this long nightmare that you have endured, have you seen any improvements in the IRS processing of 

your return? 

Ms. HAWA. Ironically, I think this year it seemed more disorganized than the first year it happened. The first year it happened 

I was automatically given to the IRS Identity Protection Specialized Unit. This year, I called the IRS, and they did not even know 

what that unit was. They could not even refer me to them. Agents 

never heard of it. It took me a while until I found that number 

again, and when I called I just got the same run-around: we are 

looking into it, we are looking into it, we are looking into it. 

Senator NELSON. Do you have a single point of contact now that 

is working on your case? 

Ms. HAWA. No. I asked to be referred to the Taxpayer Advocate. 

They told me that I needed to call the Taxpayer Advocate Service. 

I called them. The Taxpayer Advocate Service said that IRS needed 

to refer me to them. I called the IRS again, and they said, we cannot refer you until we figure out what is going on with your account. So it is just the same run-around, and I have absolutely no 

one to call. But the conversations are lengthy. I have never been 

off the phone in under 30 minutes, and it is the same conversation 

over and over and over again with no answers. 

Senator NELSON. All right. Ms. Tucker, when you come up in the 

next panel as the Deputy Commissioner, I want to know for the 

11 

record here for this committee what we are going to do to straighten out these kind of administrative problems. 

Mr. McClung, obviously your loss is extraordinary and you are 

very kind to be here with us today. Why do you think your daughter’s identity was targeted as a potential victim by this scam artist? 

Mr. MCCLUNG. I do not know that it was necessarily her that 

they were targeting. I think they are just going after any numbers 

that they can get and claiming any babies that they can. Like I 

said, we know of eight. So I do not think it was necessarily a personal thing on us. I think they got a hold of her name and were 

quickly able to find her Social Security number and use it to make 

a buck. 

Senator NELSON. And how do you think the thief found your 

daughter’s Social Security number? 

Mr. MCCLUNG. While I do not know it for a fact, just by simply 

Googling ‘‘Social Security Number Death Index’’ you can access 

anyone’s Social Security number who has passed away. Our daughter was on there. That is a very easy way that anybody in the 

world could find her Social Security number. She was only 5 

months old, so her Social Security number was not bouncing 

around many places. So our only guess is, it was through that 

index. 

To this day we do not understand why that information, all that 

private information, has to be out there so quickly. If Social Security numbers are used for ancestry research, that is fine. But give 

it a year and let us get through the tax season before that stuff 

goes public. Let us close things out on that tax season. 

Senator NELSON. Do you have any knowledge that the IRS has 

made any effort to catch the thief? 

Mr. MCCLUNG. None. We have gotten very little information from 

the Taxpayer Advocacy office. They did tell us that they linked ours 

and two other cases that I told them about with the same tax preparer, and that an investigation was under way. Where that investigation has gone, is going, went, we have no idea, and we were 

told we are not allowed to know because of privacy reasons. 

Senator NELSON. If your daughter’s Social Security number was 

not so easily available as you just indicated, do you think this 

would have occurred? 

Mr. MCCLUNG. I do not think so. I do not understand how else 

anyone could have gotten her Social Security number. We filled out 

the paperwork at the hospital when she was born, but we did not 

get a number then. We only got a number after we filled out the 

paperwork in the hospital and the card was mailed to us. It never 

left our house. 

The only place her number ever went was perhaps medical insurance and life insurance. It is not like her number was out in paperwork at a taxpayer office, a tax filing center where somebody could 

have gotten into those papers and found that number. Her number 

did not go many places. So, no. If it was not for that index, I really 

doubt we would have gone through all that. 

Senator NELSON. Well, thanks to you. You have communicated 

with parents of other SIDS victims who have had their children’s 

identity stolen and used to commit tax fraud. Do you want to share 

some of those hardships with our committee? 

12 

Mr. MCCLUNG. Sure. In our situation, Kaitlyn passed away in 

May, so we have a total of, I guess, almost 9 months by the time 

we filed our taxes for at least a small portion of that pain to go 

away. I mean, not that it ever completely goes away. But some of 

these families, their children had just passed away at the end of 

that year, and then they had that on top of it, the heartache there, 

just from a personal level. 

Then, as I mentioned in my testimony, some people really counted on that money. The funeral expenses—nobody plans for funeral 

expenses for a baby. So, some of those families were counting on 

that money from their tax refund to pay those bills. With the economy today, everybody is really counting on their refunds. Whenever 

they get delayed, whether it is because of my situation or the other 

situations you have heard here, it can be a hardship on anybody. 

Senator NELSON. I want to thank you all personally for coming 

up and sharing what is a bureaucratic nightmare and has become 

a personal nightmare. This is what we wanted to get out on the 

record here, what is happening to a lot of people across the country. We are going to try to do something about it. Identity theft is 

a major problem today, but this is where it is important, in this 

particular area where it is so lethal, for people just to be able to 

cope. You all are certainly good examples of what being a victim 

of this kind of identity theft will do. The committee wants to thank 

you very much. 

I am sorry that Senator Crapo has not gotten here in time. If you 

would, as I dismiss you, if it is possible that, if you do not have 

a flight to catch, you could stay. When Senator Crapo gets here, I 

would like for him to have the opportunity to meet you and ask you 

any questions. 

So with that, let me ask the second panel if you all will come up, 

please. 

Well, thank you all for being here. The first witness on our second panel is Ms. Nina Olson, National Taxpayer Advocate. She has 

been sounding the alarm on this issue since 2005. Identity theft 

has been on the Taxpayer Advocate’s list of the most serious tax 

problems for several years, and we appreciate your participation. 

Our next witness is James White, the Director of Tax Issues at 

the Government Accountability Office. Mr. White is going to discuss GAO’s audit and investigative work on the issue of tax fraud 

through identity theft. 

Our third witness is Beth Tucker, the Deputy Commissioner, Operations Support, at the IRS. Ms. Tucker reports directly to the 

IRS Commissioner. She oversees IRS support functions and business practices. Ms. Tucker, we appreciate very much you being 

here as well. 

So let us just start in the order in which I introduced you. Ms. 

Olson, if you will proceed. 

STATEMENT OF NINA E. OLSON, NATIONAL TAXPAYER 

ADVOCATE, INTERNAL REVENUE SERVICE, WASHINGTON, DC 

Ms. OLSON. Chairman Nelson, thank you for inviting me to testify today about the subject of identity theft. I first want to apologize to Ms. Hawa for what she found an unsatisfactory experience 

with the Taxpayer Advocate Service. I can assure you that my ofVerDate Nov 24 2008 19:58 Aug 03, 2012 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 R:\DOCS\75283.000 TIMD
13 

fice gives the highest priority to these cases, and we have successfully resolved tens of thousands of these cases each year. Moreover, 

as you noted, I have covered this issue with specific recommendations, both to Congress and the IRS, since 2005. 

Ms. Hawa, I will be glad to speak with you after this hearing so 

we can make sure your case is resolved. 

Senator NELSON. Thank you very much for that. I would encourage anybody who is listening to this hearing to take advantage of 

Ms. Olson’s office. 

Ms. OLSON. Thank you. 

I note that identity theft requires a careful balancing between 

protection of taxpayers from a devastating crime and imposing an 

unreasonable burden on all taxpayers. Some protections would increase return on refund processing time for all taxpayers, not just 

the victims. In our testimony today, we have sought to strike the 

right balance between protection and burden. 

Over the last 3 years, the IRS has made significant progress in 

this area, including adopting many recommendations from my office. The IRS has provided greater discretion for its employees to 

determine the true owner of an SSN in question without referring 

the matter to the Social Security Administration, which would require years to resolve. 

It has developed an electronic marker to mark accounts of 

verified identity theft victims. It has created an IRS identity theft 

affidavit form. It has adopted a standardized list of acceptable documents to substantiate identity theft. It has established a centralized unit to provide assistance to identity theft victims. It has provided a global account review prior to closing an identity theft victim’s case to ensure that all related issues have been resolved. And 

it is issuing PINs to verify taxpayers that will enable them to file 

tax returns electronically. 

Notwithstanding these efforts, the IRS is seeing unprecedented 

levels of identity theft casework, and the current approach is not 

working as intended. The population of taxpayer accounts with an 

identity theft indicator has grown significantly, subjecting almost 

a million accounts to business rules. If a return does not pass these 

business rules, it will be considered unpostable, meaning it will not 

be processed until it is manually reviewed, resulting in longer processing times and refund delays. 

In 2009, the IRS established the Identity Protection Specialized 

Unit, or IPSU. IPSU, however, is struggling to effectively manage 

identity theft cases. Whether because of resource constraints or a 

policy decision, the IPSU is not staffed to handle cases itself. Rather, it attempts to coordinate with up to 16 different IRS functions. 

Without adequate staffing in the IPSU and the related functions 

that actually work identity theft cases, the benefits of any process 

improvements will be minimal for both taxpayers and the IRS. 

IPSU procedures accept unreasonable IRS processing delays, allowing 60 days for the IPSU to follow up with a function to see if 

the requested action was taken and not considering a case aged 

until after 180 days or 6 months has passed. The IRS does not currently track any data about the cycle time for identity theft cases, 

but they can languish for months without resolution. The Taxpayer 

14 

Advocate Service has made numerous additional recommendations 

to address tax-related identity theft. 

These include allowing taxpayers the option to turn off the ability to electronically file so that the thief cannot beat them to the 

punch filing electronically, systematically retiring expired Social 

Security numbers, utilizing information reporting earlier in the filing season, notifying taxpayers of potential identity theft, and 

working with the Social Security Administration to keep SSNs out 

of the public domain. 

As noted earlier, the SSA now makes significant personal information public upon a person’s death, including the decedent’s full 

name, Social Security number, date of birth, date of death, and the 

county, State, and zip code of the last address on record. This information is now regularly obtained and used by government agencies, credit reporting agencies, financial firms, and genealogists. 

Unfortunately, it is also used by identity thieves to commit tax 

fraud. 

While I understand the competing policy concerns, the government’s provision of all this information in unredacted form aids 

and abets identity theft and tax fraud and is frankly appalling. It 

provides identity thieves with the opportunity to steal potentially 

billions of dollars of Federal funds through fraud. Not insignificantly, there is also a compelling personal and emotional cost to all 

of this. 

I urge Congress and the SSA to address the problem immediately. Congress could pass legislation for the SSA similar to Internal Revenue Code 6103, which is our confidentiality provision. 

A least comprehensive solution would be to redact all but the last 

four digits of the number. 

I appreciate the opportunity to appear before you today, and I 

will be glad to answer any questions you might have. 

Senator NELSON. Thank you, Ms. Olson. 

[The prepared statement of Ms. Olson appears in the appendix.] 

Senator NELSON. Mr. White? 

STATEMENT OF JAMES R. WHITE, DIRECTOR, TAX ISSUES, 

GOVERNMENT ACCOUNTABILITY OFFICE, WASHINGTON, DC 

Mr. WHITE. Thank you, Chairman Nelson. Thank you for inviting 

me to this hearing. 

As the victims made clear, identity theft-related tax fraud is an 

insidious crime. To begin, I want to describe a typical case of refund fraud, illustrated on page 3 of my statement and on the easel. 

First, a thief steals a taxpayer’s identity. This happens outside 

of IRS. Second, the thief files a tax return claiming a refund using 

the name and Social Security number of the innocent taxpayer. 

After verifying that the name and Social Security number match, 

IRS then issues the refund to the thief. 

Later, the legitimate taxpayer files a return. At that time, IRS 

discovers two returns have been filed using the same name and Social Security number, IRS holds up any refund while it notifies the 

taxpayer of a problem, and it investigates. The notification from 

IRS may be when the taxpayer first learns his or her identity has 

been stolen. 

15 

Employment fraud is different, as illustrated on page 4 of my 

statement. With employment fraud, a thief uses a stolen name and 

Social Security number to get a job. The following year when taxes 

are due, the employer reports the income to IRS on a wage and tax 

statement, and the innocent taxpayer files a tax return. 

IRS matches tax returns with the employer reports after April 15 

and discovers income reported in the name of the innocent taxpayer that was not included on the taxpayer’s return. IRS sends a 

notice of under-reported income to the taxpayer, and that is when 

the taxpayer and IRS first learn about the identity theft. 

To summarize so far, IRS learns about an identity theft affecting 

taxpayers long after the theft occurs, and available evidence suggests the problem is growing. 

Now I will outline what IRS is doing to resolve IRS’s ID theft 

problems, detect tax fraud, and prevent future problems. Starting 

in 2004, IRS took a number of steps which Ms. Olson summarized, 

so I will not repeat. In 2009, we recommended that IRS develop 

measures and data for assessing the effectiveness of these efforts. 

IRS agreed, has done some assessments, and has taken new actions based on those assessments. 

To help resolve innocent taxpayers’ problems, since identity theft 

makes it appear they either claimed two refunds or under-reported 

their wage income, IRS is placing a temporary ID theft indicator 

on accounts while still investigating. The purpose is to alert all IRS 

offices that ID theft may be the explanation for what appears to 

be tax evasion. 

To detect identity theft-related tax fraud, IRS screens returns 

filed in the names of past victims. The screens are not perfect. If 

for example IRS screens out returns with a change of address, it 

will slow refunds to some legitimate taxpayers who moved. If it 

screens too loosely, more fraudulent returns get through. This year 

over 200,000 returns failed the screens and 146,000 were fraudulent. Also, IRS is experimenting with a new screen for the Social 

Security numbers of deceased taxpayers. The intent is to prevent 

thieves from filing using the identities of deceased taxpayers. 

Another new step gives past fraud victims special PIN numbers. 

IRS screens out returns filed in the names of those taxpayers unless the PIN is attached. This is an experiment that has not been 

applied to all taxpayers yet, or all ID theft victims yet. 

IRS’s ability to address ID theft is constrained by law, timing, 

and resources. The laws governing the privacy of taxpayer data 

limit IRS’s ability to disclose information about suspected ID 

thieves to Federal, State, or local law enforcement agencies. Complicating any investigations is the fact that IRS typically discovers 

the ID theft long after it occurred. Finally, criminal investigations 

require resources. Last year, IRS initiated about 4,700 criminal investigations of all types, including identity theft, tax evasion, 

money laundering, and other financial crimes, far fewer than the 

number of ID theft cases. 

All of this raises the question of whether IRS can and should be 

doing more. Options exist, but they come with trade-offs. IRS could 

screen tax returns filed in the names of known identity theft victims more tightly, but that will increase the number of false 

16 

positives and delay refunds to those taxpayers. It would also burden employers who could be contacted about reported wages. 

Looking forward, IRS needs to continue assessing its efforts, such 

as PINs and the screens for deceased taxpayers, to learn what is 

effective. We have not assessed the effectiveness of these steps. In 

the long term, IRS should be looking at how to take more advantage of the new processing systems it is building. With better processing, IRS might someday be able to match tax returns to wage 

statements before refunds are issued, and thus prevent more refund fraud. To do such pre-refund matching, the due date on employers’ wage statements would have to be moved earlier. 

Mr. Chairman, this completes my statement. I would be happy 

to answer questions. 

Senator NELSON. Thank you, Mr. White. 

[The prepared statement of Mr. White appears in the appendix.] 

Senator NELSON. Ms. Tucker? 

STATEMENT OF BETH TUCKER, DEPUTY COMMISSIONER, OPERATIONS SUPPORT, INTERNAL REVENUE SERVICE, WASHINGTON, DC 

Ms. TUCKER. Chairman Nelson, I appreciate the opportunity to 

testify on the very important issue of identity theft. Let me start 

by saying, deep apologies to the taxpayers who shared their stories. 

I know this has been extremely frustrating, and it is a heartbreaking experience to have to go through. 

One of our highest priorities at the IRS is to ensure that taxpayer information is secure and protected. We take identity theft 

very seriously. Regrettably, by the time we detect and stop a perpetrator from using someone else’s personal information, the victim’s 

data has already been compromised outside of the tax filing process. 

The IRS is not the cause of the identity theft. The fraud perpetrated by individuals using a taxpayer’s stolen identity should be 

seen within the context of a much larger problem in the United 

States and around the world. The public and private sectors are 

targets of identity theft, including small businesses, large corporations, banks, and other government agencies. 

Although the initial theft takes place outside tax administration, 

interaction with the IRS is sometimes the first instance in which 

taxpayers become aware that they are victims, as we heard from 

the earlier panel members. I will provide context on how we see 

identity theft play out at the IRS and then outline our efforts to 

address this problem, assist taxpayers, and protect the integrity of 

tax administration. 

Generally, victims of identity theft could experience two tax 

issues. First, someone could steal another person’s identity and use 

the Social Security number to file a tax return and fraudulently obtain a refund. The rightful owner of the Social Security number 

will be unaware that this has happened until the person attempts 

to file his return. It is then discovered that two returns have been 

filed using this same number. We call this type of fraud a refundrelated crime. 

The second tax issue an identity theft victim could experience is 

when someone steals his Social Security number and uses it to obVerDate Nov 24 2008 19:58 Aug 03, 2012 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 R:\DOCS\75283.000 TIMD
17 

tain employment. In this instance, the IRS receives a W–2 or a 

1099 that reports income that the rightful owner of the Social Security number did not earn. We call this type of fraud an 

employment-related crime. 

In 2007, we created the Office of Privacy, Information Protection, 

and Data Security to focus on identity theft prevention, assistance, 

and collaborative partnerships. I would like to briefly highlight our 

efforts to date on the respective prongs of this strategy. Through 

prevention we seek ways to protect innocent taxpayers and keep 

taxpayer dollars out of the hands of criminals. 

In fact, since 2009 we have protected nearly a billion dollars in 

fraudulent refunds from going out the door of Treasury. We recognize the need to provide assistance to taxpayers who are identity 

theft victims. We have created a series of identity theft markers 

that are placed on taxpayers’ accounts when they are verified as 

victims of either a refund-related or employment-related identity 

theft crime. Returns related to marked accounts pass through a series of filters, as Mr. White just testified to, that try to identify 

fraudulent returns before the refunds are processed. These markers 

help to prevent a victim from experiencing similar tax issues year 

after year. 

Since 2008, the IRS has placed nearly 400,000 markers on taxpayers’ accounts. In addition, we have established a customer service unit with specially trained assisters dedicated to answering the 

questions of the victims. As you have heard earlier, we have recently initiated a pilot where we have issued identity protection 

Personalized Information Numbers, or PINs, to 56,000 taxpayers 

who have been victimized by identity theft. The PIN provides the 

IRS and the taxpayer with greater assurance that the return filed 

is coming from the legitimate taxpayer rather than an identity 

thief. 

The third prong of our strategy is collaboration and partnership. 

We collaborate with other Federal agencies, such as the Federal 

Trade Commission and the Department of Justice. We have recently entered into a new partnership with the Internet Crime 

Complaint Center, coordinated by the FBI and the National White 

Collar Crime Center. The IC–3 receives criminal complaints related 

to cyber security and identity theft and has agreed to accept victim 

referrals from the IRS to conduct additional investigation of identity theft issues that fall outside the scope of tax administration. 

This is very new, and we are very pleased and will keep you posted 

on how this new partnership goes. 

Let me conclude by telling you very candidly that, in the process 

of increasing our efforts to block attempts by identity thieves to exploit the tax system, there have been many inconveniences and 

delays created for honest, hardworking taxpayers such as we saw 

earlier today. We need to do a better job at the IRS in this area. 

We have dedicated significant efforts over the last few years to 

streamline the process for taxpayers caught up in identity theft. 

These efforts are starting to pay off. 

I know how frustrating it is for individuals to be stuck in sometimes long delays while they depend on their tax refund, and for 

that we are deeply sympathetic. This is a particularly challenging 

problem for all of us to deal with, and you have my commitment, 

18 

Senator, that we are focused on continuing to improve our operations in this area. 

Thank you. I will be happy to answer any questions you might 

have. 

[The prepared statement of Ms. Tucker appears in the appendix.] 

Senator NELSON. You mentioned, Ms. Tucker, that you will provide a PIN number to someone who requests one. How do we get 

the taxpayer educated to know that they can request a PIN number so that they have that extra means of protection against continuing to be victimized? 

Ms. TUCKER. Yes. Senator Nelson, the PIN number is actually a 

pilot that we launched the start of this filing season, so we have 

provided PIN numbers to 56,000 victims of known identity theft. So 

we randomly selected the 56,000 for part of this pilot for this filing 

season. We are currently in the process, now that the filing season 

is over, of going back and evaluating, first of all, how many of the 

taxpayers whom we gave that PIN to actually used it, for how 

many of the taxpayers who used the PIN did we effectively block 

another perpetrator coming in and trying to use it again, and then, 

based on the results of the study, we will be making determinations about expanding that pilot and providing that additional lockdown PIN to other victims of identity theft. 

Senator NELSON. So a pilot study with 56,000; but we actually 

in the last 3 years had half a million incidents of identity theft, and 

only 40 to 50 are annually referred to the Justice Department for 

prosecution. So how do you see the issuing of this PIN number as 

a means of protection for the taxpayer? 

Ms. TUCKER. This one is so difficult, as you have heard everyone 

talking about. Every time we identify a scheme, the perpetrators 

seem to be trying multiple other ways to get in and use that identity. We believe, however, through the use of this PIN, if in fact 

the PIN is protected and is not also somehow compromised—so, for 

example, we have reports of folks whose tax returns are taken in 

the course of a robbery. Of course, if your secret PIN number is actually written on your file, that could be a problem. But what our 

plan is, if this pilot goes as we expect, Senator Nelson, we would 

be reissuing the PIN every year to the taxpayers who have been 

known victims of identity theft. 

Senator NELSON. In other words, you are going to change the 

PIN number each year? 

Ms. TUCKER. Correct. Of course, as I said, this is all contingent 

on us looking at how successful the pilot has been. Of course, too, 

as Mr. White from GAO just testified to, we are in a fine balancing 

act at IRS. This past filing season, we processed 132 million tax returns, and they are still coming in. As you know, folks have extensions. Trying to balance keeping tax administration moving and 

getting refunds out quickly to the valid taxpayers is a priority, and 

I think something that the American public expects of us. At the 

same time, with budget constraints, as we try these different avenues to stop the perpetrators, it is a constant balancing act. 

You mentioned the prosecution recommendations. Just to give 

you a little additional context on that, this past year we did recommend working—as you know, the process is, the IRS identifies 

cases, we refer them to the Department of Justice, and they make 

19 

decisions about which cases are moved forward. We did make 41 

recommendations. There were 55,000 taxpayer accounts associated 

with those prosecution recommendations. As a result, 32 indictments were handed down, 20 individuals have been sentenced to 

prison time. Average sentencing is 4 years. Our criminal investigation folks who do those tougher investigations have spent roughly 

400,000 hours on identity theft since 2008. 

Senator NELSON. So the figures that I have—half a million incidents of identity theft in the last 3 years and only about 40 to 50 

cases annually referred to the Justice Department for prosecution—those are not correct? 

Ms. TUCKER. The prosecution recommendations for 2010 were 41. 

So those are the recommendations, but the context around it, that 

includes—those recommendations actually cover 55,875 taxpayers 

who have been caught up in the identity theft. 

Senator NELSON. Well, 55,000 just in the year 2010? 

Ms. TUCKER. Yes, sir. In the referral that we made. 

Senator NELSON. Well, our information is that there were half a 

million incidents of identity theft in the last 3 years. 

Ms. TUCKER. That is correct. The total number of identity theft 

cases that we actually have had since 2008 that we have coded is 

401,209 cases, but the context I was giving you was around the 

prosecution cases. 

Senator NELSON. All right. Well, with this small amount of prosecutions, does this look somewhat like almost a risk-free crime? 

Ms. TUCKER. Here is the difficult thing with a lot of these cases. 

The schemesters are, as you know, very savvy. In a large number 

of instances, IRS has no idea who these people are because they 

are filing from hotspots, they are filing from places that are not 

traceable. They are having the refunds sent to a bank account that 

could be opened and closed fairly expeditiously. 

In one of the areas that we are actually seeing grow, the fraudsters can actually go in through a return preparer and, based on 

some of the software agreements, they can actually have the refund 

deposited against a debit card, which is not traceable. 

A lot of these are onesies and twosies, where maybe one person 

decides to steal someone’s identity and then they move on. I think 

the other thing that is important to remember with the volume of 

cases that we are seeing at IRS—roughly 132 million cases coming 

in this filing season—our criminal investigation unit has to develop 

the cases, potential fraud cases, on a wide array of other tax 

crimes, whether it is under-reporting, other types of tax evasion 

schemes. So identity theft, as egregious and horrible as it is, is just 

a piece of the tax crimes that IRS and the Department of Justice 

are dealing with. 

Senator NELSON. We talked about how providing a personal identification number is one way to at least stop the crime from being 

committed. I want to ask Ms. Olson and Mr. White, do you believe 

that the IRS should be making these personal identification numbers more readily available? 

Mr. WHITE. I think that the approach that needs to be taken 

with the pilot is to study the effectiveness of the first year’s use of 

these numbers before putting them into widespread use. That was 

our recommendation in 2009. IRS has been doing these sorts of asVerDate Nov 24 2008 19:58 Aug 03, 2012 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 R:\DOCS\75283.000 TIMD
20 

sessments. They are surprised sometimes at what does not work or 

what does work here. They also need as part of that research to 

make sure they understand the impact on innocent taxpayers. 

So the screening that was done this year—for example, they 

screened out over 200,000 returns that looked suspicious, and 

145,000 of those were fraudulent but over 50,000 of them were not 

fraudulent. Those were innocent taxpayers who had their refunds 

held up. So I do think it is important to learn from the pilot before 

going ahead. It sounds like it has merit. 

Senator NELSON. Ms. Olson? 

Ms. OLSON. I agree with Mr. White. I think the pilot will show 

us a lot. It will help those 50,000 some-odd taxpayers who are part 

of that pilot, and we will learn how to refine it. A few years ago 

the IRS put out the screening rules, and last year was a good year. 

The year before, we stopped many, many more innocent taxpayers’ 

returns, and so created a burden on them unnecessarily. 

We have recommended that taxpayers be given the option to turn 

e-filing off under their Social Security number because, for some 

preparers, for some thieves, e-filing is the name of the game. You 

just basically go in and try to get what you can and then leave. If 

they have to do paper, they will not necessarily follow that route. 

But as Ms. Tucker has observed, these thieves, these criminals are 

incredibly creative, and they will adapt to whatever we do. 

We have thought about—and this is a very extreme measure and 

it shows the hard choices that the IRS has to make—do you basically say, on April 15, that is the day we are going to issue 

everybody’s refunds? We wait until April 15 to see whose come in? 

It is not the first to file anymore that goes through, it is whose do 

come in. But just think about the 140 million taxpayers and what 

we are doing to them by making them wait for April 15. There is 

no one silver bullet for this problem. 

Senator NELSON. Ms. Tucker, is it IRS policy to notify victims 

when it determines that a fraudulent tax return has been filed? 

Ms. TUCKER. The process—and I actually have to commend Mr. 

White for his charts; I think he had a good illustration—the process that we use at IRS is, unless there is some other indicator on 

the account, when the first return comes in, if it does not hit our 

screens and we go ahead and process it through, we would issue 

the refund. In many instances, as I said in my testimony, especially 

if it is a refund-related crime, the valid taxpayer would know that 

their identity has been compromised when we reject their return. 

In many instances, that is their first time to know. It is also the 

IRS’s first time to know that we have a duplicate taxpayer. 

So the other way that an individual could find out from the IRS 

that it appears there is a problem with their Social Security number is in the employment-related scheme that I mentioned earlier, 

where someone has used my Social Security number to gain employment and, if they do not come in and file a tax return then, 

once we do the matching of all the information documents, we 

could then go back to the valid taxpayer and give them a notice 

and say, you have failed to report this additional W–2 income. And 

then they would begin to engage in a process with us around validating that they in fact did not work for that other employer, and 

21 

that is usually another indication that they have had their identity 

compromised. 

Ms. OLSON. Senator Nelson—— 

Senator NELSON. Hang on 1 second. 

Ms. OLSON. I am sorry. 

Senator NELSON. Let me just follow that up. I am trying to understand; is it the IRS policy to notify victims when you have determined that a fraudulent tax return has been filed? What you just 

described, you would indicate that a tax return has already been 

filed. So is that considered the notice? 

Ms. TUCKER. The notice would be when we receive the second return, and the valid taxpayer, their return is rejected. Then I think 

we actually had that situation explained from two of the prior witnesses. That was how they became aware that someone had in fact 

compromised their identity. 

Senator NELSON. So I am trying to relate it to something else, 

like a credit card company will notify a customer if they suspect 

fraudulent activity. I have been amazed. Some of the credit card 

companies have apparently some elaborate system set up by which 

they can detect something out of the ordinary, and they will call 

the customer and say, did you purchase such-and-such at such-andsuch a place? But I take it the IRS would have no way of knowing 

that, because you get a return, and, even though it is fraudulent, 

you are leaving it up to the taxpayer, when they get that rejection 

of them filing their legitimate claim, then they have to take the 

next step. 

Ms. TUCKER. Chairman Nelson, let me put some flavor on this 

just to show you how difficult it would be for IRS to even know 

when, in many instances, this first return comes in. Our records 

show that 10 million families move every year, so the address on 

their return could change, legitimate taxpayers; 46 million individuals change jobs; 2.1 million individuals marry, so the names on 

the joint return could legitimately change; 1.1 million individuals 

divorce; 4.1 million births; and 2.4 million deaths. 

So, when you look at all of that change that legitimately rolls 

through the filing of the tax return, for someone to have stolen 

someone’s Social Security number and come in and filed with potentially the only change being a different address, that would not 

prompt us to proactively reach out, to use Mr. White as an example, to pick up the phone and call Mr. White and say we are holding your tax return because we see that your address changed, especially when this happens so frequently. 

Senator NELSON. Ms. Olson, you had a comment? 

Ms. OLSON. Well, I agree with Ms. Tucker how difficult it would 

be for some of these screens, for all the reasons that she says. I 

do think we can do a better job, when we are rejecting a return 

where we have already received a prior return, to provide some information saying, we have already received a return and you might 

call us, and we will walk you through the identity theft protection 

and the issues. 

There is a category of cases, however, that we have covered over 

the years that does not have to do with return filing, per se. It has 

to do with when we have a return where someone has used someone else’s Social Security number to get work and they are filing 

22 

their actual returns under an Individual Taxpayer Identification 

Number—not the SSN—but the SSN shows up on a W–2. We will 

often see these issues where we know the SSN that has been compromised. We are not going to work that particular case because 

it may be a low-dollar case and it just does not justify being 

worked, so we do not pursue the wages that were reported under 

that Social Security number. 

But there is a clear indication that that number has been compromised, and we know, usually, the owner of that number. We 

now have legal authority. We have an opinion from the Chief Counsel in the IRS that we can contact the owner of that Social Security 

number to say someone is out there using your number. It is associated with a return that is an ITIN rather than your return. We 

are not doing that. We have recommended for years that the IRS 

do that. We have now a clarification of our legal authority, and I 

really do not understand why—that could be a computer-generated 

notice. 

Senator NELSON. And that would come from the IRS? 

Ms. OLSON. Yes, because we are seeing a return being filed 

under an ITIN, but the W–2 attached to it has a Social Security 

number attached. So it is clear that someone is using that Social 

Security number illegally to get work in the United States. We 

have the authority to contact the true owner of that Social Security 

number to say, someone is using your Social Security number illicitly, and that would allow the owner of that Social Security number 

to then take protective steps, including calling us to put a marker 

on their account to protect them in the future, but also maybe ask 

for a PIN, if we go beyond the pilot, but also contact, take steps 

just on their credit bureau reports and things like that. 

Senator NELSON. What do you think about that, Ms. Tucker? 

Ms. TUCKER. The issue that Ms. Olson is bringing up involving 

the ITINs is one that is also extraordinarily complex, so I think 

what we would want to do based on the legal opinion that our Taxpayer Advocate just mentioned, is to go back and take a look at it. 

So, if you would allow, we will look at that and get back with you. 

Senator NELSON. Is this pilot study that you have done, is it providing personal identification numbers to the taxpayers? 

Ms. TUCKER. The pilot for the 56,000 taxpayers, we do give them 

a PIN number that we gave them the option to use when they filed 

the past tax return. That basically is the key to unlock the account 

and allow the return to come through, so it is a PIN directly associated with those 56,000 Social Security numbers. 

Senator NELSON. How did you select the 56,000? 

Ms. TUCKER. I will need to go back and verify this, but it is my 

understanding that it was a random selection. 

Senator NELSON. What is your experience when a taxpayer will 

come to you substantiating with a police report or an official affidavit that they have been victimized by the theft of their Social Security number or their wallet that would have their Social Security 

number? Does that raise any threshold where you would consider 

issuing a PIN to them? 

Ms. TUCKER. Just to go back again, the PIN pilot that we just 

initiated, we are really waiting now to see, was that effective. But 

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bers out—so let me give you an example. Lost wallets, where either—I think we had one of the panelists talk about the fact that 

her wallet was stolen. 

We had roughly 23,000, I believe, taxpayers who have come to 

us saying they have lost their wallet. A lot of times they find their 

wallet. It is not as direct as actually seeing someone take your wallet. And I think this gets back to the balance in tax administration. 

If we put a PIN on every account, it will slow down the processing 

of returns, so that is the fine balancing act. 

That said, I think at this point at IRS, just like the pilot I mentioned, we have another pilot that we have under way this year 

with 6,000 deceased taxpayer accounts, where there is still the 

ability to file that final return, but then we are locking that account after the final return is filed. 

So candidly, I think the PIN may be a good solution, but, until 

we evaluate the test, I think it is hard to know. The other thing 

I would say, IRS is going to have to stay in front of this for years 

and years to come. I do not think there is one solution to solve this. 

Senator NELSON. When are you going to have this data evaluated? 

Ms. TUCKER. So what we will be doing, after all the returns are 

processed through, and we are still—a lot of people think filing season ends on April 15th. It actually goes on for quite a bit longer 

as we process the returns. Then we will go back in and actually 

investigate all 56,000 accounts to see how many of those taxpayers 

did use the PIN. Did a perpetrator try to ping that account, and 

was it blocked with the PIN? Then we will evaluate the effectiveness of the pilot. So I would say, by later this summer we should 

know. 

Senator NELSON. All right. Well, then later this summer, are we 

talking about July? 

Ms. TUCKER. I would probably say August/September time frame. 

Senator NELSON. All right. I am going to invite you to come back. 

Ms. TUCKER. I would welcome the opportunity. 

Senator NELSON. I would like to have a report on what you have 

concluded because, if this thing is working, I think it is in the interest of the American taxpayer to get this thing off dead center 

and get it moving. Part and parcel of that, I want you to come back 

to us about, what should we be doing with the Social Security numbers of deceased Americans that could otherwise be utilized, as was 

painfully described by the dad, Mr. McClung. So we have a lot that 

we can do here, but, needless to say, you heard the testimony of 

the three victims. This is a nightmare. 

Now, when you get to senior citizens, they do not necessarily 

want to file an electronic return. Some of them just feel more comfortable in filing on paper. Ms. Olson has recommended allowing 

taxpayers to turn off electronic filing on their tax account. Why 

does the IRS not allow taxpayers to turn off electronic filing? 

Ms. TUCKER. One thing I failed to mention earlier—and I think 

this is probably a good time to talk about this—we have talked 

about enhancements that have been made over the years, and I 

truly do appreciate the role of the Taxpayer Advocate and GAO as 

well in partnering with IRS on recommendations to enhance this 

program. 

24 

I think Ms. Olson’s recommendation about the ability to lock 

down the account is something where we actually will have a task 

group that kicks off in June that the Taxpayer Advocate Service is 

a member of. And we are actually going to be doing another endto-end review of our identity theft program, as well as considering 

all of the additional enhancements that are coming in, not only 

from the Taxpayer Advocate, but actually recommendations that 

we have received from citizen advocacy groups as well. So that will 

be something else we will be able to report back to you later in the 

summer. 

Senator NELSON. So you are saying that, when we meet again, 

then you are going to be able to tell us if the IRS is going to allow 

taxpayers to turn off electronic filing? 

Ms. TUCKER. Correct. 

Senator NELSON. All right. 

Let me ask you, do you have any estimate of how much identity 

theft costs U.S. taxpayers in lost revenue? 

Ms. TUCKER. Mr. Chairman, this is a tough area for us to totally 

estimate. We have really good figures on the fraud that we are 

keeping from going out the door—that is the billion-dollar figure. 

Our latest estimate is from 2009, and I believe GAO actually was 

involved as well in helping us put that estimate together. That was 

that, for filing season 2009, roughly $15 million in fraudulent refunds were issued. 

Senator NELSON. Fifteen million. 

Is there any limit on the number of wrong attempts of someone 

filing before the IRS would freeze an account? 

Ms. TUCKER. Yes. So I think you are referring to the phone and 

web authentication, when someone is filing an electronic return. So 

this is one where the identity thief obviously has a deeper amount 

of information potentially than just the Social Security number. So 

there are five data elements that the identity thief would need to 

know to be able to electronically file, and they are locked out after 

six attempts. 

Senator NELSON. All right. Now, if I go down to an ATM, and I 

type in the wrong code three times, that is it. So, in this case, it 

is six times? 

Ms. TUCKER. It is six times to actually e-file the return. But the 

perpetrator actually would have, to even be able to get that far, 

quite a bit of information already at their disposal. 

Senator NELSON. Other than the Social Security number. 

Ms. TUCKER. Right. They would need to know—I really hate to 

actually share that information—— 

Senator NELSON. Well, then we will—— 

Ms. TUCKER [continuing]. Because it is a bit of a road map. 

Senator NELSON. Then we will share it offline. 

Ms. TUCKER. All right. 

Senator NELSON. Here is what I am trying to get at. If an ATM 

will shut me down after three times, and a thief has the Social Security number, shouldn’t we have some program set up so that 

once we have identified that there is a thief using this Social Security number, that automatically there is a program that would reject that out the next time that the thief uses that Social Security 

number? 

25 

Ms. TUCKER. Yes. This is the additional complexity here, and I 

think this gets back to something we have all talked about: the 

burden on the legitimate taxpayer as well, and also the fact that 

the electronic filing is really a tool to enter the tax system to perpetrate fraud. 

The same thing could happen with a paper return. There is actually then additional security on what a perpetrator would have to 

know to even be able to electronically file. On the paper return, 

quite candidly, the perpetrator could still get that return through 

with greater ease than through the electronic filing system just by 

the nature of what is requested on the paper return. 

Senator NELSON. Does the staff have any additional questions? 

[No response.] 

Senator NELSON. All right. I want to ask our first panel, do any 

of you have any question that you want me to ask our witnesses? 

All right. Come up and just use the microphone next to Ms. Olson. 

Ms. X. I recently called the IRS after my case was solved, asking 

for information about next year, and they were checking my identity before talking to me. I was very surprised that the questions 

asked to check my identity could have been easily answered by the 

criminal. I know I was robbed. I have a police paper saying that 

I was robbed. The police know that, not only was I robbed, I am 

a victim of identity theft. I actually told the IRS before the fraud 

occurred that I was a victim of identity theft. I am still surprised 

that the fraud actually happened, being that I sent the affidavit. 

Now the questions I get as security questions are questions that do 

not really mean anything. 

Senator NELSON. So you are getting security questions from the 

IRS, like what? 

Ms. X. Like my Social Security number, my address. 

Senator NELSON. You have already turned in, of course, that information. 

Ms. X. Well, the criminal has this information. They have my 

wallet. 

Senator NELSON. Yes. 

Ms. X. They know the name of my daughter and her Social Security number as well. 

Senator NELSON. But the IRS is asking you that? 

Ms. X. Yes. 

Senator NELSON. Well, would they not be asking you that for 

verification that you are who you are? 

Ms. X. Yes. Exactly. What I am trying to say is, as security questions, these will fail. They absolutely will fail, because I can tell 

you that my daughter’s name is so and so, that my Social Security 

is so and so, and my address is so and so. So can the criminal. 

Senator NELSON. All right. Ms. Olson, will you pick up on that 

and elaborate, please? 

Ms. OLSON. I think that is a very interesting and valid point, 

that when somebody’s identity has already been compromised, the 

standard authorization or authentication questions actually are 

useless because the thief will have all the information that banks, 

credit cards, anybody asks. If we have an identity theft marker on 

the account, what I think our next step is—and I applaud you for 

26 

raising this because this is a great issue—is that it should trigger 

a different series of questions. 

So, when you call to ask a question, the person answering the 

phone on the IRS side can look at your account and see, aha, you 

have the ID theft marker on, and then that triggers, we are going 

to go through a different series of questions because some aspect 

of your identity has been compromised. Now, what those questions 

are, I do not know because, in your case, what would he or she not 

know about you? That is really going to be hard. 

If I can just follow up on one thing. Our victim here did raise 

the difficulty of getting a new Social Security number. In my private practice, when I was in private practice, I represented so 

many people who had been victims, and I know how difficult it is 

to get Social Security to issue a new number. Although it has been 

done, it really is very, very hard. I think that is worth looking into. 

Why, today, is it not possible, even though the number has a history, that you cannot retire that Social Security number and then 

get a new number so that the person can carry her history over, 

but start afresh? 

Mr. WHITE. Mr. Chairman, the PIN might be one example of 

something. This would obviously be in the future, because so far 

PINs are only being used in the small pilot. But that would be a 

secret that presumably only the innocent taxpayer and IRS would 

know. 

Senator NELSON. Any comment, Ms. Tucker? 

Ms. TUCKER. I think that is absolutely right. You did point out 

the fact that, when someone calls our toll-free number—and I think 

the panelists have pointed out the frustration—that each time 

someone calls we do, regardless of who they are talking with, have 

to go back through the same basic set of questioning to ensure that 

we have the valid taxpayer on the line. I know that is frustrating, 

but I think to Mr. White’s point, I mean, the PIN could potentially 

help cut through some of that red tape. 

Senator NELSON. Any of the others? Yes, ma’am. Ms. Hawa? 

Ms. HAWA. I just wanted to kind of get a sense from all of you 

about what the process is with the W–2 forms, and at what point 

does that get sent to the IRS so that, if the perpetrator files a higher adjusted gross income, the victim is not victimized once again 

by being asked to pay the difference. 

Senator NELSON. All right. So the question is, once the identity 

is stolen and the thief is trying to make even more, what kind of 

safeguards are in place to try to prevent that? 

Ms. OLSON. This situation was actually the initial reason for the 

identity theft marker, why we recommended it, because what was 

happening was that the victim would get a notice from us saying, 

yes, you filed your income tax return but you did not report all of 

your income under your Social Security number. The poor tax victim would have to come into the IRS and prove, in audit situation, 

that, one, their identity had been stolen, and two, there was no 

way that, living in Philadelphia, they could have worked in California at the same time as working in Philadelphia. 

That put an additional burden on, so the idea was to have this 

marker where, if we knew that the person was a victim or that 

that Social Security number had been compromised in the work enVerDate Nov 24 2008 19:58 Aug 03, 2012 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 R:\DOCS\75283.000 TIMD
27 

vironment, that when this extra unreported income would show up, 

our systems would tell us this person has been a victim of identity 

theft, and then we would not bother that victim about it. We would 

know that those extra wages, reporting from some other State, 

were not that person’s. Now, still you have to look, because maybe 

the victim did leave off some information, but it flags it so that we 

do not automatically issue that letter. 

Senator NELSON. All right. Ms. Olson, I want you working with 

Ms. Tucker on that issue before we have Ms. Tucker come back in 

September to tell us about the pilot, if you will make that one of 

the matters that you discuss when you come back. 

Mr. WHITE. Mr. Chairman, if I could add something here. I think 

it is an excellent question that was raised. Part of the problem here 

is that the W–2s are not required to be submitted by employers to 

IRS until well into the filing season. Many of them are not required 

to come in until the end of March. So IRS does not have anything 

to check in terms of a legitimate W–2 to verify what is on the tax 

return. This is still years in the future, but there is some potential 

that the Service can move to the point where, if they can match 

that information before issuing refunds, they could detect more 

fraud and prevent the refund from going to the thief. 

Senator NELSON. I want to thank all of you. This has been a 

very—all right. We are not going to leave you out, Mr. McClung. 

Mr. MCCLUNG. Sorry. I just had one more. A 2-part question, 

really quick. 

Senator NELSON. Address it through me. 

Mr. MCCLUNG. Through you. All right. What I would like to 

know is, how we get closure to our case. We were told that we 

would get the first letter saying that someone needed to amend 

their return sometime in a year, and then we would get another 

letter saying that, if neither of us amended our return, then we 

would have to provide proof. Well, we did not get that first letter 

until this past November. We are still in limbo, wondering whether 

that second letter is coming. So, would it not be nice to notify the 

victims that the case is closed and that it has gone away? 

And really quickly, part two is, anytime we have tried to contact 

the IRS, or the reporters who have covered our case have talked 

to the IRS, all of a sudden, privacy and disclosure protects everybody, and they cannot talk to anybody. So, we do not need to know 

names, but it would be nice to know that something has been done 

and all of our complaints have not fallen on deaf ears. 

Senator NELSON. I think that is a very legitimate request. Do 

you want to amplify on that, Ms. Olson? 

Ms. OLSON. Well, the first thing is, I do think that your account 

has been taken care of, but I will go back and check, because the 

Taxpayer Advocate Service does do closing letters and things, and 

I was assured that your account had been taken care of, and the 

only reason why I can speak to you is because you have given me 

authorization to say this publicly, which goes to the next part 

about disclosure. Certainly, without the taxpayer’s consent, we cannot disclose any information about cases. 

For Mr. McClung, we have discovered information about the 

fraud that has occurred on his case. What I can say publicly is that 

we have made a criminal referral on that case, on the circumVerDate Nov 24 2008 19:58 Aug 03, 2012 Jkt 000000 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 R:\DOCS\75283.000 TIMD
28 

stances of what we have seen in that case and related cases. We 

cannot say anything more than that. There is an investigation that 

may or may not be going on, and no IRS employee or any Federal 

employee can compromise that investigation. That is very difficult 

for the taxpayer who, as you say, is wanting closure. But, you 

know. 

Senator NELSON. Yes. When it gets into the hands of the Justice 

Department, it is a different matter, and they have their own set 

of laws that they go by, and they guard that pretty closely. 

Well, this has been extremely illuminating. Ms. Tucker, I am 

going to look forward to visiting with you privately in September, 

and then we will determine if we want to have another hearing 

with regard to what you tell me as a result of this pilot study with 

50,000-some taxpayers in the study. It seems to me that, if you 

have a good response, then we need to get this thing kicked off so 

that we are protecting these taxpayers. 

Ms. TUCKER. I will look forward to speaking with you in September. 

Senator NELSON. All right. 

And I thank everybody here. It has been an illuminating discussion. Thank you. Have a good day. 

The hearing is adjourned. 

[Whereupon, at 3:53 p.m., the hearing was concluded.] 

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