A single household in Lansing, Mich., pulled down at least $3.3 million in tax returns after the IRS failed to notice the address was listed on more than 2,000 separate filings.
J. Russell George, the treasury inspector general for tax administration who released the report detailing the incident, says it is just one of many fraud cases among results he finds “extremely troubling.”
The growth of tax fraud and the government’s struggle to keep up with it continues to worsen, “At a time when every dollar counts,” he said in a statement, Bloomberg
The Lansing case stands out. The address was listed on a total of 2,137 different filings, said George.
“Undetected tax refund fraud results in significant unintended federal outlays and has the potential to erode taxpayer confidence in our nation’s system of tax administration.”
At the current pace, identity thieves are projected to collect $21 billion in fraudulent tax refunds over the next five years. In at least 10 cases alone, the IRS sent over $470,000 via 300 direct deposits to the same bank account.
Peggy Bogadi, commissioner of the IRS wage and investment division, disputed the estimate, and released a statement that said, “We are devoting significant resources to combat tax refund fraud using stolen identities and have already taken action with respect to issues identified in the report.”
She added that so far this year, almost $12 billion in confirmed refund fraud has been stopped. The report acknowledged that the issue has in fact become an agency priority and that the IRS has made some headway in identifying fraud patterns.
The report suggested that Congress grant the agency the authority to use existing federal databases to further combat things like identity theft, a major driver of tax fraud.
Democratic U.S. Sen. Bill Nelson of Florida, a major hub for fraud, acknowledged the problem in a statement. “Online tax cheats are swindling billions from law-abiding Americans,” he said. But he remained vague on solutions, saying only, “we’ve got to find a fix.”
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