Home Media Center News Releases

Washington, D.C.—As the 2015 tax-filing season heats up, the nation’s largest independent federal employee union warned today that continuing to underfund the Internal Revenue Service (IRS) will exacerbate the growing problem of identity theft.

Due to chronic staffing shortages, the IRS is struggling to catch criminals who file fake returns using other people’s identities and collect refunds owed to legitimate taxpayers, said Colleen M. Kelley, national president of the National Treasury Employees Union (NTEU).

According to a recent report by the Government Accountability Office (GAO), the IRS prevented $24 billion worth of refunds from being handed out to ID theft criminals in 2013. Still, the agency paid out $6 billion in refunds to 1 million fraudulently-filed returns that year.

“As criminals become more sophisticated and tech-savvy, Congress must help the IRS stay ahead of the lawbreakers and identity thieves,” Kelley said. “Now is not the time to cut funding for an agency that collects 93 percent of the federal government’s revenue. Congress must increase the 2016 budget for IRS, which is struggling to fulfill its mission after suffering five straight years of budget cuts.”

The IRS says it blocked 19 million suspicious returns and avoided paying out $63 billion in refunds to returns filed by ID theft criminals from 2011 through October 2014. But each ID theft case can take up to 120 days to resolve given the complexities involved, according to the IRS.

Calling identity theft cases “among the most complex,” the IRS has stated that “fighting identity theft is an ongoing battle as identity thieves continue to create new ways of stealing personal information and using it for their gain.”

In her January report, IRS Taxpayer Advocate Nina Olson said because of a “huge spike” in identity theft, the IRS—which is predicting a loss of 16,000 to 17,000 employees over the last five years—was forced to divert 3,000 employees in 2014 to work on identity theft cases.

“Combating ID fraud is quickly becoming the next big challenge for the IRS,” the NTEU leader said. “The IRS is doing the best it can but it urgently needs more resources to catch more of these ID thieves and resolve the cases faster so taxpayers are not forced to wait anxiously for months on end.”

The GAO’s latest “High Risk” report, which highlights pressing problems facing federal agencies, acknowledged that the “uncertain budgetary environment” is a big reason why the IRS struggles to combat ID theft and enforce the nation’s tax laws.

Enforcement is not the only program to suffer in recent years. IRS taxpayer services have also taken a big hit as Congress has slashed a total of $1.2 billion from the agency’s budget since 2010. As the GAO noted, the IRS has seen an 11 percent reduction in its workforce since then. As a result, fewer returns will be examined this year for potential ID theft even as the number of fake returns rises.

The increasing popularity of online tax software adds to the ID theft problem. Fraudulent filings made recently using TurboTax—reportedly the subject of federal investigations—underscore the need for the IRS to be extra vigilant, the NTEU leader said.

NTEU supports the White House’s proposal to give the IRS $12.9 billion in fiscal year 2016, an increase of more than $1.9 billion from the current level. Under the proposal, the IRS enforcement division’s budget would go up by $539 million from this year’s level and the agency’s taxpayer-service programs would get $252 million more.

“Providing $12.9 billion would help the IRS crack down on ID theft with greater vigor and answer more than 43 percent of the phone calls it receives from the taxpaying public,” the NTEU leader said. “Increasing the agency’s budget will help all taxpayers and the economy.”

NTEU represents 150,000 employees in the IRS and 30 other federal agencies and departments.