The IRS may issue as much as $26 billion in fraudulent tax refunds as a result of identity theft in the next five years. The Treasury Inspector General for Tax Administration J. Russell George told Congress that the IRS cannot say exactly how many identity thieves are filing false returns, The Washington Post’s 2chambers blog
According to testimony before Congress, the IRS received 940,000 returns involving identity theft in 2011, representing $6.5 billion in refunds. The inspector general discovered 1.5 million additional potentially fraudulent returns. IRS Deputy Commissioner Steven Miller admitted to the House Ways and Means Committee that “the IRS cannot stop all identity theft.”
“However, we have improved and we are committed to continuing to improve our programs,” he said according to the Post. “We can and will continue to work to prevent the issuance of fraudulent refunds and we can and will continue to work with innocent taxpayers to clear their accounts and/or get them their money faster in a courteous and professional manner.”
The IRS is working to crack down on the problem, adopting new screening procedures to spot potentially fraudulent returns. Typically, identity thieves file electronic returns on behalf of real tax payers and collect refunds. Rep. Xavier Beccerra, D-Calif., noted at the hearing that the IRS’ budget this year was cut by $305 million and now has 5,000 fewer employees processing returns and assisting taxpayers, the Post reported.
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