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Wednesday October 1, 2014

Washington News

Washington Hotline

Tax Fraud Costs $5.2 Billion

A Government Accountability Office (GAO) report published on September 22 strongly urged IRS Commissioner John Koskinen to take bold action against tax refund fraud. There was an estimated $5.2 billion in fraud during the past year.

Several Congressional leaders responded with pointed requests to the IRS Commissioner and strongly advocated improved efforts to combat tax refund fraud.

Senate Finance Chair Ron Wyden (D-OR) noted, “This GAO report is an important step forward as it makes a number of important recommendations for verifying that taxpayers are getting the refunds they deserve and that the fraudsters don’t get them instead. I’m working closely with my colleagues here in the Congress and the IRS to fight this serious and growing problem that hurts both citizens and the integrity of our tax administration.”

The Ranking Member of the Senate Finance Committee is Orrin Hatch (R-UT). He also expressed the need for immediate action by stating, “As the GAO made clear today, there is more that can be done to improve the agency’s anti-fraud capabilities. Moving forward, I hope the IRS will take a serious look at these recommendations and work with Congress to implement smart safeguards that not only better serve the victims of identity theft refund fraud but, ultimately, stop it before it even starts.”

A center for the tax refund fraud problem has been the state of Florida. Sen. Bill Nelson (D-FL) has been very active in encouraging IRS and Department of Justice pursuit of fraudulent refunds. He stated, “This problem is not going away, unless we go hard after these criminals while also doing what we can to prevent this crime.”

House Ways and Means Chair Dave Camp (R-MI) observed that there have been obvious refund fraudsters who have not been quickly apprehended by the IRS. He noted, “In one case, the IRS received over 2,000 returns from a single address – paying out over $3.3 million in refunds. That is not just a simple error, that is clear mismanagement.”

Wyden and Hatch have introduced the Tax Refund Theft Prevention Act of 2014 (S.2736), which protects filers who have had their refund stolen. They note that while the cost of tax fraud is larger, taxpayers are also victimized by IRS impersonators.

Timothy Camus, Deputy Inspector General for Investigations at the Treasury Inspector General for Tax Administration, stated that “the volume of complaints received by TIGTA’s Complaint Hotline Center about this scam is unprecedented.” He noted that there have been 130,000 contacts with TIGTA complaining about IRS impersonators. The fraudulent impersonations resulted in individuals losing $8 million last year.

IRS Commissioner John Koskinen agreed that this is an increasing problem. He stated, “For some reason, impersonation scamming has grown this year. It has always been out there, but there is much more of it this year.”

Published September 26, 2014

Previous Articles

Congress Votes and Departs to Campaign

House and Senate Tax Extender Meetings

Congress Returns for Two Weeks

Whopper of an Inversion

Koskinen Warns of IRS Problems