Clearwater lawyer Jim Staack may have found a way for frustrated identity theft victims to get their overdue tax refunds: Sue the IRS.
Last year, Staack represented James and Christine Gordon in their effort to pursue a class action on behalf of identity theft victims who were unable to obtain their rightful tax refunds. The Gordons got their refund 12 days after the suit was filed.
Then Staack added Crystal Lake as a plaintiff in the case. Twelve days later, she got her refund.
The Internal Revenue Service then filed a motion to dismiss the lawsuit, arguing it was moot because the plaintiffs had gotten the relief they sought.
Staack tried to add more names to another amended complaint, but U.S. District Judge James Moody wouldn't allow it. He granted an IRS motion and dismissed the suit in June. Because the Gordons and Lake had received their refunds, the judge ruled, they no longer had the right to pursue a claim.
Now Staack is suing the IRS again. This time, he has 16 named plaintiffs. One, Patricia Carey, has been waiting 4½ years for her refund.
"It's inexcusable," Staack said. "It's ridiculous."
Carey, 46, of Orlando says the IRS still owes her a refund of nearly $2,200 for 2007, but the agency has kept her subsequent refunds, holding her accountable for the money a thief in Jacksonville got in her name.
"They say I owe $10,000," Carey said. "I was pretty beaten down."
She said she has called the IRS repeatedly, each time spending at least 45 minutes on the phone, each time instructing a new person about the particulars of her case, most times getting the word that she had to send in still more information.
Carey said she did what the IRS told her, filling out a police report and an identity theft affidavit. After writing her congressman, she finally reached someone from the Taxpayer Advocate's Office, who now calls her once a month – to tell her nothing has changed.
"I definitely want my money, and I would like to not have this problem in my life any more," Carey said. "I also think the policies need to be changed. I don't know why the burden of proof is on me when they have all the evidence."
Carey and the other plaintiffs say they are victims of a kind of tax refund fraud that has exploded in the Tampa area and around the country. Street criminals use stolen identity information to file tax returns to obtain fraudulent refunds, bilking the federal government of hundreds of millions of dollars in the Tampa area alone and billions nationwide.
William and Dana Amaismeier of Apollo Beach are still waiting for their 2010 tax refund.
Dealing with the IRS, Amaismeier said, is "pain in my backside. It's ridiculous that they can't even return a phone call."
Amaismeier, 39, works as an inside sales representative for O'Neal Steel and called Staack after he heard about the Gordons' lawsuit. He and his wife are now plaintiffs in the new complaint. He said he hopes the suit will help them get their refund.
"To some people, $1,800 might not be a lot of money," he said, "but to me $1,800 is quite a bit of money."
Staack said he expects many, if not all, the plaintiffs in the new lawsuit will soon be receiving their refunds. He hopes that if it happens enough times, the courts will see a pattern to justify allowing the lawsuit to proceed as a class action.
"We have to show a definite pattern of conduct," Staack said. "They refuse to pay refunds until the suit is filed. Then they start methodically, magically paying the refunds."
If it happens, say, three or four more times, "then perhaps we can convince the court the plaintiffs do have standing."
The IRS said it doesn't comment on pending litigation.
In court pleadings in the Gordons' case, the Justice Department said it was a coincidence that the Gordons and Lake received their refunds 12 days after filing suit.
"They were paid in due course, as the IRS was able to investigate and process their claims," the government wrote. "The Gordon claim was paid without special treatment, before the United States was even served with the Gordons' complaint. …
"The Lake claim was expedited when Ms. Lake appealed to the IRS taxpayer advocate that she needed special treatment because she was suffering financial hardship, but not because she was added as a plaintiff to this case."
And so it will be, the agency said, with every other plaintiff who sues.
The government said Staack's continued attempts to add new plaintiffs become, at some point, "a ridiculous exercise in attempting to maintain an improper class action. Once the circumstances of a particular taxpayer are investigated, that taxpayer will receive his refund if he is entitled to it."
Still, the IRS inspector general released a report in May criticizing the agency for failing identity theft victims.
People trying to get their tax refunds are forced to navigate a Byzantine system of unreturned phone calls, conflicting regulations and unskilled Internal Revenue Service employees who give them incorrect information, according to the report.
Staack said that after he filed the Gordons' lawsuit last year, his office was contacted by a steady stream of identity theft victims who all tell the same story.
"They get the runaround from the IRS. They make promises that are not kept. They're told it will take 60 days. Nothing happens. Then they call back and are put off again."
Staack said he hasn't been paid yet for his work on the suits. He filed them under a statute that would allow him to receive attorneys fees from the government once a lawsuit advances.
Staack said he's pursuing the claim again because he knows there are more victims.
"They're still being pushed around and being treated as if they did something wrong," he said, "rather than the person who committed the fraud in the first place."