August 28,2007

Senators Investigate Identify Theft, Tax Fraud

Baucus, Grassley aim to develop strategies for limiting counterfeit tax returns

Washington, DC – Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Republican Member Chuck Grassley (R-Iowa) are asking the Government Accountability Office (GAO) to investigate the growing problem of tax fraud related to identity theft, and how it contributes to the tax gap – the gulf between Federal taxes legally owed and actually paid each year. The Senators’ letter is aimed at identifying what procedures the IRS currently follows to curb identity theft and subsequent tax fraud, and how these measures can be improved. Portions of the tax gap strategy crafted by Treasury at Baucus’s request include efforts to fight tax fraud. The Senators said today that tackling identity theft must be an integral part of the Department’s effort to stop legally owed taxes from going unpaid.

“Like all Americans, the IRS needs to be aware of the dangerous consequences of identity theft,” said Baucus. “Innocent taxpayers who are victims of identity theft should not be burdened with delayed refunds and red tape while the IRS is sending fraudulent refunds to the thieves who have stolen their identities. The IRS should be taking all possible precautions to ensure that it is not refunding false tax claims. Federal dollars should be used to pay for priorities like education and health care, not sent to identity thieves by the IRS.”

Grassley said, “Identity theft is a concern across the country. Tax forms contain sensitive information, so taxpayers need to have confidence that the IRS is part of the solution, not part of the problem, on identity theft.”

The Finance Committee has jurisdiction over tax policy. The text of the senators’ letter is follows here.