Former IRS Employee Pleads Guilty to Wire Fraud and Aggravated Identity Theft in Connection With Refund Scheme

Friday, March 1st, 2019 @ 6:57PM

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CFEG reports that on April 22, 2015, a former IRS employee was charged with Wire Fraud and Aggravated Identity Theft in a federal district court in the Western District of Texas.

According to court documents, the IRS employee was employed by the IRS in Austin, Texas until February 7, 2015. He held a position as a Tax Examining Technician in the department responsible for assisting individuals in obtaining an Individual Tax Identification Number (ITIN). An ITIN is a tax processing number available only to certain non-resident and resident aliens, their spouses, and dependents who cannot obtain a Social Security Number. Some applicants go through individuals authorized by the IRS to assist with the ITIN process, but in other cases, applicants provide original documents directly to the IRS for authentication and review. The IRS then establishes an ITIN for the individual, allowing the filing of Federal tax returns. While working in the ITIN department, this IRS employee had access to individuals’ identification documents and the IRS computer systems that assign ITINs.

Between about March 25, 2013, and January 1, 2015, this IRS employee devised a scheme to defraud the Government and obtain money by means of fraudulent pretenses. Specifically, in furtherance of his scheme, he used identification documents submitted by legitimate applicants without their authorization or knowledge, and caused the IRS to establish ITINs in their names. He then filed false tax returns with the IRS using the ITINS and obtained tax refunds in the names associated with the fraudulent ITINs.

This IRS employee prepared and filed at least 51 Federal income tax returns in the names of at least 24 individuals, causing the Department of Treasury to issue a minimum of $124,852.48 in fraudulent tax refunds. The refund checks were mailed to mailboxes established by this IRS employee in either his name or the names of other individuals using copies of passports in the names of the other individuals.

This IRS employee established several bank accounts, most via the Internet, using means of identification of other individuals without their consent or knowledge, and deposited at least $119,734.02 from the fraudulently obtained tax refunds into the accounts. He further converted the funds to his personal use by paying, among other things, living expenses, personal debts, mortgage loans, and his tuition at Texas State University.

On June 3, 2015, this IRS employee entered a guilty plea to one count of Wire Fraud (18 USC 1343) and one count of Aggravated Identity Theft (18 USC 1028A). Sentencing was scheduled for August 26, 2015.

When IRS employees engage in schemes to defraud the Government and obtain money by fraudulent pretenses the IRS fails in its mission to apply the tax law with integrity and fairness to all.

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