Skip to content

Report Reveals IRS Failing to Detect or Prevent Fraudulent Tax Returns

August 08, 2012

Washington, DC – Today, Oversight Subcommittee Chairman Charles Boustany Jr., M.D. (R-LA) sent Internal Revenue Service (IRS) Commissioner Doug Shulman a letter demanding answers on a report from the Treasury Inspector General for Tax Administration (TIGTA) revealing the IRS may be blatantly ignoring fraudulent tax returns and applications for the Individual Taxpayer Identification Number (ITIN).  The report raises concerns about whether IRS management has made preventing and catching fraud a priority for the agency.  Specifically, the report notes that IRS procedures appear to discourage employees from flagging potentially fraudulent ITIN applications, and that IRS management went so far as to disband a review group with proven success at identifying fraudulent activity.

Below are examples of some of the extreme fraud the agency failed to identify after IRS management weakened the agency’s integrity measures:

  • 154 mailing addresses were used 1,000 or more times on ITIN applications.
  • Ten individual addresses were used for filing 53,994 tax returns, resulting in the processing of $86.4 million in fraudulent tax refunds.
  • Ten bank accounts received 23,560 tax refunds totaling over $16 million.
  • At one Michigan address where IRS had previously rejected an ITIN application, the agency went on to issue 640 separate refunds to that address totaling $1.5 million dollars. 

Chairman Boustany stated, “This report is shocking.  It is clear that not only is the IRS not doing its job in detecting fraud, but agency management has taken steps to actively avoid dealing with fraudulent activities.  When nearly six million dollars in returns are being sent to one address, it is blatantly clear that the IRS is turning a blind eye to protecting taxpayer dollars.  It’s one thing if the IRS tries to catch fraud and fails, but it’s quite another when management apparently takes steps to weaken program integrity.  The IRS needs to immediately account for the findings in this report.  The American taxpayer deserves answers.”