Billions, Yes, IRS Paid Billions of Dollars to Tax Scammers

Taxpayers have every right to be furious with the prevalent tax scams occurring as a result of identity theft. Responsible citizens comply with their duty, only to have scammers skim billions of dollars from the coffers. The IRS is trying to prevent this from happening.

According to a recent Forbes article report, “From 2011 through October 2014, the IRS has stopped 19 million suspicious tax returns and protected more than $63 billion in fraudulent refunds.”

Sounds good, right? You almost feel like cheering. But then the article goes on to say, “Still, the IRS actually paid out $5.8 billion in fraudulent refunds that it realized were fraudulent only later. Also, there may be fraudulent refunds not included in these numbers. The IRS may never know just how many dollars of fraudulent refunds it has paid.” Not so good.

Apparently as the article reports, the Government Accountability Office says that the IRS is “trying hard to centralize its efforts to authenticate taxpayers.” Just how and what are they doing?

One thing they are doing according to a recent Wall Street Journal report is issuing “victims of tax identity theft a six-digit Identity Protection PIN for use in filing returns once cases have been resolved. Returns can’t be filed without the number, and the taxpayer receives a new one every year. In addition the IRS has initiated a pilot program in which they’re giving PINs to residents who filed returns in Georgia, Florida and the District of Columbia last year. These states, according to the article have the highest percentage of tax identify theft.

We can also urge Congress to act. According to the Wall Street Journal article, “Top lawmakers in both the House and Senate are probing this year’s spate of tax identity thefts, and the Senate Finance Committee is expected to focus on them in a hearing on tax scams in March. Experts say the fraudulent-filing epidemic is partly of the government’s own making, because easy e-filing and rapid refunds—both priorities in Washington—also offer myriad opportunities to criminals. The IRS often doesn’t get wage data until late spring, long after many tax refunds have been paid, so it is at a disadvantage.

Every taxpayer must do his or her best to protect his or her personal information too. The IRS cannot correct the problem alone. We must all help and pay attention when giving out our information.