IRS Criminal Investigators Probing Virus Payment Fraud

By David van den Berg
Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.

Sign up for our Public Policy newsletter

You must correct or enter the following before you can sign up:

Select more newsletters to receive for free [+] Show less [-]

Thank You!

Law360 (April 3, 2020, 7:13 PM EDT) -- The rebate payments most Americans are due to get under the recently passed novel coronavirus relief bill haven't started going out yet, but the Internal Revenue Service's Criminal Investigation Division is already developing related fraud cases, its spokesman said Friday.

People already are being scammed by those who say they can help them get their payments sooner in exchange for a fee, Justin Cole, director of communication and education for the IRS's Criminal Investigation Division, told Law360.

"So we've seen the fraud begin, we've got leads and are working on the beginnings of investigations already, even though the payments are not underway," Cole said.

Under the Coronavirus Aid, Relief and Economic Security Act, the IRS will send payments of $1,200 to individuals and $2,400 to married couples filing jointly, increasing by $500 for each qualifying child. Those amounts are reduced for individuals at incomes of more than $75,000, and for couples at incomes of more than $150,000. President Donald Trump signed the bill on March 27.

Treasury Secretary Steven Mnuchin said Thursday that taxpayers should start getting the "economic impact payments" in two weeks.

IRS criminal investigators are also participating in task forces formed by U.S. attorneys' offices to investigate scams related to the coronavirus pandemic.

Robert J. Higdon Jr., the U.S. attorney for the Eastern District of North Carolina, said in a Friday statement that his office was "working closely with United States attorneys all across the country and with the IRS Criminal Investigation and other investigative agencies to identify and prosecute anyone who attempts to use the COVID-19 pandemic as an opportunity to defraud the people."

There are 93 U.S. attorneys and just 21 IRS Criminal Investigation Division field offices, so it's often the case that one field office serves on four or five task forces, Cole said. The criminal division is participating along with other law enforcement offices and each brings its own expertise, he said, adding that CI representatives are focused on economic impact payment fraud, which could lead to identity theft or other financial crimes.

All field offices in the criminal division are doing outreach work, sometimes in coordination with task forces, Cole said, adding that scammers depend on the public not being informed.

The IRS itself has sounded alarms about phone calls and email phishing scams regarding the pandemic that can lead to tax-related fraud and identity theft. The agency urged people to be wary of bogus attempts to get bank account details and said it would not call or email requesting account information so that people can get payments.

Mark Matthews, a member of Caplin & Drysdale Chtd. who served as CI's chief from December 1999 until the middle of 2002, told Law360 that any time Congress provides for a payment from the U.S. Department of the Treasury, even a relatively small one, it's amazing "how fast and robust the fraud schemes are, especially those directed at seniors."

"A particular problem with the economic payment plan is that given [the] need to get these payments out ASAP, there is virtually no time for the IRS to develop any sort of antifraud controls tailored to this program," Matthews said. "But the importance of getting these payments out would seem to outweigh the fraud concern."

Still, he said, "you can go ahead and mark your calendar for the congressional hearings next year bashing the IRS for improper payments in their efforts to respond quickly."

--Editing by Neil Cohen.

For a reprint of this article, please contact

Hello! I'm Law360's automated support bot.

How can I help you today?

For example, you can type:
  • I forgot my password
  • I took a free trial but didn't get a verification email
  • How do I sign up for a newsletter?
Ask a question!