Rock Center | March 29, 2013
>>> first part of kate snow 's report, you saw how thieves can in effect reach inside the irs and steal tax refunds before the taxpayers know what's happening. so far in this scam, american taxpayers have already been fleeced for $5 billion in a single year, now we get to hear what the irs itself has to say about the scam, as kate snow continues her report.
>> irs to get on the ball.
>> reporter: in 2010 , sheila vosdoganes says she went through hell with the irs after a thief stole her identity and filed a phony tax return online. it took months before her case was resolved. did the irs give any indication that they flagged your account at this point, you would never have problems at that point?
>> the irs said my account would be flagged, and i wouldn't have anything to worry about the next year.
>> reporter: that's good news?
>> at the time.
>> reporter: but the next year, she had the same very problem. she was victimized again, she thinks by the same crook. when the irs says they have protections in place?
>> i don't believe them.
>> reporter: most of the police force have also been hit twice.
>> it became obvious to us that the irs was extremely ill prepared.
>> reporter: captain joe is not speaking as an officer, but a victim.
>> the lack of accountability is really frustrating us.
>> reporter: a crook can file electronically, making up your income and deductions, the irs offense doesn't verify those numbers until months later and that gap gives fraudsters the jump. they get a refund before anyone the wiser and real taxpayers have to wait for their legitimate refunds. how long to get your refund check?
>> eight months.
>> 14 months.
>> reporter: joe, if you could ask the irs a question, what would your question be?
>> when is this going to stop?
>> reporter: we put that question to beth tucker, director of operations support of the irs . people are inventing out of thin air identities and filing and getting tax refunds. why aren't you stopping this?
>> the irs is stopping a considerable amount of fraud associated with identity theft . we have dramatically increased our efforts to detect and prevent identity theft .
>> reporter: but you are losing $5 billion a year to this kind of fraud according to the inspector general. that's not chump change. that's a lot of money. and there is i sense that the irs doesn't have a sense of urgency about this problem.
>> i would strongly disagree. we stopped $20 billion from going out the door last filing season.
>> reporter: tucker says the irs has added new screening filters to flag when something might be fishy and despite budget cuss, the agency has beefed up staff in the identity theft section to deal with the increasing number of victims and triple the number of criminal investigations over the past year. they are also trying to cooperate more closely with local law enforcement in hard-hit places. in january, a nationwide sweep netted 389 suspects in 32 states.
>> are there additional things we need to do? absolutely. we are doing our very best and will continue to get better every day.
>> reporter: one of the new programs gives special pin numbers to people who have been victimized. an additional way to her phi who the real taxpayer is. and the agency issued 770,000 pins for this year. but two-time victim sheila vosdoganes is not impressed. two years in a row you are victimized. third year you did get a pin number . and the fourth year, the year we're in right now, no pin number until you call congress.
>> reporter: you had to call someone on capitol hill and advocate for them to give you a pin number .
>> that's right.
>> reporter: when the irs says we are fixing this, you say what?
>> you don't have it down. if you did, would you give a pin number that would be a permanent pin number or each year they would get one. why didn't i get one? we' i've been victimized.
>> reporter: let's talk about some of the experience. one victim says her experience of dealing with the irs was "hell." what do you say to that?
>> it's heartbreaking. a perpetrator has stolen their identity, which is a violation, and the irs is one more piece of a frustrating experience.
>> reporter: i called in, i told them i was a victim and they could tell me nothing about where the refund check had gone.
>> remember, we have people that are calling four, five times, all purporting to be the legitimate taxpayer.
>> reporter: the bad guy is calling in?
>> reporter: it feels to the victim like are you protecting the criminal?
>> absolutely not. i hate that and i can see why folks are frustrated. but the reality is, when you have these crooks that are so focused on stealing legitimate taxpayer money, they stop at no barrier to keep trying to get through to get that money.
>> reporter: and it's clear the thieves haven't given up yet. since this year, the tampa postal inspection service intercepted more than 11,000 suspicious checks and debit cards, that's just in tampa.
>> why not stop focusing on getting refunds out quickly and focus on doing it right?
>> 143 million taxpayers file a tax return every year. the greatest majority of taxpayers are filing a correct tax return , and deserve to have their refunds handled in an ex expeditious manner by the irs . the trick for us, is try to improve our detection and prevention, but not delay the legitimate tax return .
>> reporter: unless they improve their detection efforts, the treasury inspector general for tax collection says the irs stands to lose another $21 billion to tax refund fraud over the next five years.
>> so kate snow , the natural question becomes how do people prevent this from happening?
>> the easiest answer is file early, which if you are like me, you haven't done that.
>> not an option.
>> number two, watch your social security and private information. you don't always have to give it out. when are you at the doctor's office and they ask, you may not have to put it on the form. just be a little protective of that. and number three, if you don't get a refund right away, and you think are you due one, waiting and waiting, call the irs , it's possible you've been a victim.
>> interesting. scary reporting, kate snow , thanks.