$4 billion: Bogus tax refunds a growing problem

AP via finance.yahoo.com ^ | Apr 10, 2014 | Eric Tucker

[posterchild]

WASHINGTON (AP) -- An Internet connection and a bunch of stolen identities are all it takes for crooks to collect billions of dollars in bogus federal tax refunds. And the scam is proving too pervasive to stop.

A government report in November said the IRS issued $4 billion in fraudulent tax refunds over the previous year to criminals who were using other people's personal information. Attorney General Eric Holder said this week that the "scale, scope and execution of these fraud schemes" has grown substantially and the Justice Department in the past year has charged 880 people.

Who's involved? In a video message released ahead of the April 15 tax filing deadline, Holder said the scams "are carried out by a variety of actors, from greedy tax return preparers to identity brokers who profit from the sale of personal information to gangs and drug rings looking for easy access to cash."

Even Holder isn't immune. Two men pleaded guilty in Georgia last year to trying to get a tax refund by using his name, Social Security number and date of birth on tax forms.

[Paladin2]

Shut down the IRS; just one more reason.

[crusty old prospector]

This happened to my boss a couple years ago.

[the_Watchman]

This would strongly imply that the IRS does not even do a rudimentary cross check against the employer withholding.

[Extremely Extreme Extremist]

Notice how Holder blames the usual liberal bogeymen. It’s those greedy, rich tax preparers and shadowy figures rather than the inner-city welfare Moms and illegal aliens abusing the EITC.

[TurboZamboni]

Beck should do some Lifelock ads starring Eric Holder.

[Grams A]

This would strongly imply that the IRS does not even do a rudimentary cross check against the employer withholding.”

One of our neighbors received his refund in 2012 on January 12 for the 2011 tax year. W-2’s are even’t due in the mail until the end of January.

Since we don’t seem to be getting rid of the IRS, it has long been my contention that although it would hold up the process, IRS should check SS records on every refund going out over $100 and sign their name and date attesting to the fact that they did verify that the name, SS#,address and stated income on the W-2 was a match with the information on the return. Direct deposit to a checking account of all refunds instead of mailing checks would also help and provide another source of information.

[CdMGuy]

This has been huge in Florida. I read a report on it last tax season. It turns out that the IRS was not even bothering to verify a filer’s tax return with the computerized reports of salaries, wages, interest, dividends, stock sales, etc. which had been submitted directly to the IRS by the various reporting companies. The IRS simply was processing returns without any verification of income until AFTER refunds were issued. And here we all thought that every piece of income information submitted to the IRS as required by law was being utilized to insure accuracy. Just one more IRS SNAFU. However, this one is costing billions of dollars. But as Hillary Clinton would say, “What difference does it make?’’

[fwdude]

I do the tax return of a family friend. Two tax years ago, this happened to them; the electronically filed return showed an error because the Socialist Security number had already been used to file for that year. They were stunned.

The contortions and bureaucratic hoops they had to jump through to get this fixed was almost worse than the tax identity theft caused.