Division of Taxation launches tax fraud investigations unit

The R.I. Division of Taxation has launched a new special investigations unit to crack down on tax fraud. More

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Division of Taxation launches tax fraud investigations unit

IN A STATEMENT announcing the launch of a Division of Taxation special investigations unit, Tax Administrator David M. Sullivan called tax refund fraud "a cancer that is spreading across the nation." The new unit will bolster the division's crackdown on tax fraud and identity theft.
Posted 10/4/13

PROVIDENCE – The R.I. Division of Taxation has launched a new special investigations unit to crack down on tax fraud, according to the division’s quarterly newsletter Friday.

The unit will serve as the division’s primary criminal tax enforcement unit, reviewing and investigating alleged tax violations and recommending criminal prosecutions when necessary.

“Tax refund fraud is a cancer that is spreading across the nation,” said Tax Administrator David M. Sullivan in a statement. “The unit will allow the division to more efficiently and effectively identify, monitor and quantify tax fraud and related activity, and better position the division to assist law enforcement agencies in criminal prosecution.”

The new unit will investigate all types of refund fraud, including earned income tax credit fraud, property tax relief fraud and identity theft, the Division of Taxation said.

Additionally, the unit will investigate other areas of potential fraud and abuse, such as misclassification of workers, trust fund tax fraud and other business tax fraud.

According to the Division of Taxation, Rhode Island has experienced “explosive growth” in the number of fraudulent claims for refunds and other types of activity, including the smuggling cigarettes from other states.

In the past two years, the division has reportedly prevented 3,783 fraudulent refunds, saving the state more than $1.2 million in revenue.

In November 2011, the division teamed with the Rhode Island State Police to bust a multistate cigarette trafficking ring, seizing more than 100,000 packs of cigarettes.

To combat the surge in tax fraud and illicit activity, Sullivan said the Division of Taxation has relied on a team of investigators under its Tax Excise section. The new special investigations unit will centralize enforcement as an independent unit within the division.

“The overwhelming majority of taxpayers are honest and pay what they owe,” said Sullivan. “This new unit will help us enforce state tax laws as effectively as we can – thus ensuring that honest taxpayers are not overburdened and pay no more than their fair share.”

The special investigations unit will report directly to Sullivan and consist of nine positions, including seven existing positions as well as a chief revenue agent and a revenue agent.

The chief, who has not yet been appointed, will be a licensed attorney with investigative experience, the division said.

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