WASHINGTON — Police in Tampa, Fla., knew something was up when they noticed many of their biggest drug dealers were no longer on the streets. When one of the drug dealers was pulled over at a traffic stop, instead of finding drugs in the car police found large numbers of pre-paid debit cards and ledgers with Social Security numbers.

Identity theft involving tax fraud is increasing faster than law enforcement and government officials can deal with it, according to testimony today before a House oversight subcommittee. Identity theft to scam fraudulent tax refunds from the government has increased 100 percent in just three years.

 ”As of Aug. 31 of this year, IRS incident tracking reports indicated that the numbers of taxpayers affected by identity theft has more than doubled since 2008 to over 580,000 taxpayers this year alone,” said J. Russell George, Treasury Department inspector general for tax administration.

 The crime has become too easy. It’s like a party, according to Rep. Richard Nugent, R-Fla., whose district has a problem with tax-related identity theft.

“Tampa Police Department has busted what the lawbreakers call ‘make it rain’ parties, where criminals get together in a hotel room with Internet access and file fake return after fake return,” Nugent told the committee.

 Chances of getting caught and punished are low because each fraud case amounts to an average of $3,400, often too little to merit prosecution. To make putting the criminals behind bars even more difficult, the IRS is limited by law in sharing information from a taxpayer’s return with local law enforcement authorities.

 Nugent was frustrated.

“Tampa Police Department worked well with the local IRS agents and U.S. attorneys in their investigations,” he told the subcommittee. “However, once they went to the D.C. bureaucrats, detailing exactly how criminals steal the Social Security numbers, file the fraudulent tax returns and launder the resulting money, the feds mostly turned a blind eye to that issue.”

 Officials say once someone gets hold of a name, Social Security and date of birth, they have enough information to go online, file a fraudulent tax return and seek a tax credit.

 ”In 2010, IRS paid over $12 million to people who were listed as deceased,” said Rep. Todd Platts, R-Pa., the chairman of the Subcommittee on Government Organization. “Service members who were killed in action defending this great nation are often targets of identity thieves, who often use their information to steal tax returns from their families.”

Making matters even worse, Platts said, “In 2010, IRS issued $4.2 billion in tax credits to individuals who were unauthorized to work in the United States.”

 Even when the government is informed it is issuing the fraudulent checks, it sometimes can be hard to discontinue them.

“I cannot understand how other government offices can be telling the IRS that their checks are going to fraudsters, and yet the IRS continues to pump them out,” Nugent said. “Given our current fiscal situation, it is unconscionable that the federal government can be aware of billions of dollars of tax dollars being stolen right out from under our noses and do very little about it.”

 For the victims of tax fraud identity theft, the people who had fraudulent tax returns filed in their names, getting the problem fixed and their lawful refund paid could take a year and a half.

“A typical path for an identity theft refund case that is not complex may take as long as 18 months to resolve,” George told the subcommittee.

Rep. Edolphus Towns, D-N.Y., felt it was too long to wait.

“It is unacceptable to have innocent taxpayers waiting 12 to 18 months to verify their identity before a replacement refund check is issued,” he said. “We can and should do better.”

 At the hearing, government officials vowed to do more to reduce identity theft tax fraud even though their budgets and staffs are likely to be cut to save money.