How serious is identity theft tax refund fraud?

| by Max Soni

Thanks for visiting Spodek Law Group. We’re a second-generation law firm managed by Todd Spodek, who has many, many, years of experience successfully handling hundreds of criminal defense cases. Our team has over 40 years of combined experience – and we’re known for cases that others say were unwinnable. We represented Anna Delvey in the case that became a Netflix series, handled the Ghislaine Maxwell juror misconduct case, and defended clients in the Alec Baldwin stalking case. If you’re researching identity theft tax refund fraud, you’re probably worried about federal charges or you’ve already been contacted by IRS Criminal Investigation. This article explains what you’re facing, how serious the government treats these cases, and what actually happens when they come after you.

Identity theft tax refund fraud isn’t a state charge – it’s federal. That means the United States government prosecuting you, not some local district attorney. The difference matters because federal prosecutors have unlimited resources, years to build cases, and IRS Criminal Investigation maintains a 90% conviction rate when they decide to prosecute. They don’t file charges unless they already have you.

The stakes are brutal. Federal identity theft offenses carry up to 15 years in prison for basic charges, with fines and criminal forfeiture of any property used in the offense. Add aggravated identity theft under 18 U.S.C. § 1028A and you’re looking at a mandatory minimum 2 years – that means the judge has no choice but to send you to prison for at least two years, regardless of circumstances. Some cases involving terrorism or massive schemes can reach 30 years. A former paralegal indicted in March 2025 faces a maximum of 177 years in prison for wire fraud, tax evasion, and aggravated identity theft combined.

These aren’t empty threats. In April 2025, Imafedia Adevokhai got 46 months in federal prison for his role in a tax refund fraud scheme. His co-defendant Osazuwa Peter Okunoghae received 78 months – that’s six and a half years. Another defendant, Michael Martin, got 18 months. The Texas case involved filing false returns using stolen identities. Not hypothetical – actual prison time that’s happening right now in 2025.

What makes identity theft tax refund fraud so serious is how the government stacks charges. You’re not just facing one count. File ten fraudulent returns? That’s ten counts of wire fraud if you filed electronically, each carrying 20 years maximum. Claim refunds totaling $50,000? Add theft of government funds – another 10 years. Use someone else’s Social Security number? Aggravated identity theft with that mandatory 2-year minimum that runs consecutive to other sentences, not concurrent. Prosecutors layer charges like this to pressure guilty pleas.

The amounts don’t need to be massive for federal prosecution. Monica Patricia McGinley faces 10 years for helping prepare false returns from 2014 to 2024. The government charges you based on the amount you attempted to steal, not what you successfully obtained. A California defendant is charged with submitting Forms 1041 claiming over $360 million in fraudulent refunds – if convicted on the mail fraud charge alone, he’s looking at 20 years.

Detection has improved dramatically. During the 2025 filing season, the IRS flagged about 2.1 million returns as potential identity theft. The Taxpayer Protection Program automatically identifies suspicious returns – the IRS won’t process returns or issue refunds until they verify identity.

But here’s what defendants don’t understand until it’s too late – the IRS doesn’t catch you immediately and arrest you. They watch. IRS Criminal Investigation special agents spend months or years building cases, tracking patterns, identifying co-conspirators, analyzing financial records. By the time they knock on your door with a search warrant or grand jury subpoena, they already have bank records, electronic filing logs, witness statements, and evidence you don’t even know exists. That 90% conviction rate isn’t luck – it’s because they only prosecute when conviction is almost certain.

The FBI’s Internet Crime Complaint Center received over 1,000 complaints about tax-related identity theft in the past year, representing a 26% increase. Federal prosecutors work with the FBI, Secret Service, and Postal Inspection Service to build these cases. Multiple agencies, unlimited budgets, years of patience. You’re not fighting one investigator – you’re fighting the entire federal government.

Cooperation doesn’t always save you. Tax fraud cases often involve so many defendants that your cooperation value is limited. Everyone flips. Everyone provides the same information. If you’re part of a larger organization filing hundreds of fraudulent returns, cooperation against the organizers might help – but if you are the organizer, you’re facing the full weight of every fraudulent return filed under your direction.

The impact on victims extends beyond the government. Identity theft tax refund fraud destroys real people’s lives – taxpayers who file legitimate returns only to discover someone already filed using their Social Security number. In fiscal year 2023, 69% of affected taxpayers had adjusted gross incomes at or below 250% of the Federal Poverty Level. These are people who desperately need their refunds to pay rent, buy food, cover medical bills – and fraud steals from them directly. Processing times for victims average 506 days in fiscal year 2025 according to the National Taxpayer Advocate. Federal judges see these victim impact statements at sentencing. They don’t react kindly.

If you’re already under investigation or have been contacted by IRS-CI, talking without a lawyer is the worst mistake you can make. IRS special agents are trained interrogators – they’re not there to help you explain, they’re there to gather evidence for prosecution. Anything you say will be used against you, and you cannot talk your way out of a federal investigation. Silence is your only protection until you have experienced federal criminal defense counsel.

At Spodek Law Group, we’ve handled federal fraud cases involving wire fraud, securities fraud, and government program fraud – we understand how federal prosecutors build these cases and where the weaknesses are. Our former federal prosecutors on staff know the government’s playbook because they used to run it. We know which defenses work in federal court and which are fantasy. Every case has unique facts that might create reasonable doubt, procedural errors in the investigation, or opportunities to negotiate reduced charges – but you need lawyers who actually try federal cases, not lawyers who handle state court misdemeanors and think federal court works the same way. It doesn’t.

Identity theft tax refund fraud is serious because it’s federal, because the penalties are severe, because the conviction rate is overwhelming, and because judges have limited sympathy for defendants who steal from both the government and from low-income taxpayers trying to get their legitimate refunds. This isn’t a scare tactic – this is what actually happens in federal court in 2025. If you’re involved in any way, even peripherally, get a federal criminal defense lawyer immediately. Not next week. Not after you “see what happens.” Now.