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Report Raises Serious Questions on IRS’s Ability to Catch Identity Theft Tax Fraud

August 02, 2012

Washington, DC  –  Oversight Subcommittee Chairman Charles Boustany Jr., M.D. (R-LA) sent a letter to the Internal Revenue Service (IRS) demanding a full accounting for the agency’s continued inability to stop tax fraud related to identity theft.  A new report from the Treasury Inspector General for Tax Administration (TIGTA) finds that the IRS catches only a small portion of identity theft related fraudulent tax returns, costing taxpayers over $20 billion dollars.  Additionally, the report found that the “IRS uses little of the data from identity theft cases…to detect and prevent future tax refund fraud.”

The report identifies numerous examples where criminals used a single physical address from which to file hundreds of tax returns and received significant taxpayer dollars:

  • 2,137 returns resulting in $3.3 million in refunds to a home in Lansing, Michigan;
  • 765 returns resulting in $903,084 in refunds to a home in Chicago, Illinois;
  • 741 returns resulting in $1 million in refunds to a home in Belle Glade, Florida;
  • 703 returns resulting in $1 million in refunds to a P.O. box in Orlando, Florida; and
  • 518 returns resulting in $1.8 million in refunds to a home in Tampa, Florida.

Chairman Boustany stated, “This report raises serious questions regarding the IRS’s ability to detect tax fraud and whether they are allocating their resources effectively to detect frauds.  We’re learning that the IRS paid multiple refunds totaling nearly a million dollars to a single bank account – that is the kind of red flag that ought to draw more scrutiny.  We need to know why the IRS is not catching this fraud.”