Tax Fraud: IRS Could Issue $26 Billion In Tax Refunds To Fraudsters Over Next Five Years

The IRS may issue as much as $26 billion in fraudulent tax refunds, according to the Treasury Department's inspector general for tax administration.

In the battle between the Internal Revenue Service and identity thieves, the thieves are winning.

In the next five years, the U.S. may issue as much as $26 billion in tax refunds to fraudsters that engaged in identity theft, according to Congressional testimony made on Tuesday by J. Russell George, the Treasury Department's inspector general for tax administration. (H/t The Washington Post.)

This scam involves fraudsters who steal people's identities in order to file fraudulent tax returns and claim refunds on their behalf. Of the 2.2 million fraudulent tax returns the IRS received in 2011, 940,000 returns were associated with identity theft, according to George's testimony.

This type of fraud is a growing problem for the IRS. Over 640,000 taxpayers were affected by tax fraud in 2011, more than double the number of taxpayers affected in 2010, according to statistics provided by George cited by the Wall Street Journal.

Have you been a victim of tax fraud? Please e-mail your story to [e-mail].

Legitimate tax refunds have been delayed because of growing identity theft and tax fraud, The Huffington Post reported in April.

Andy Armas, one Connecticut resident, found out his Social Security number and $2,000 tax refund were stolen this year when he tried to file his taxes, but the IRS said someone else already had filed his taxes, according to NBC Connecticut.

Some scammers work on a massive scale. One tax refund scammer allegedly stole 300 taxpayers' identities, according to Reuters.

Two former NFL football players recently were arrested for tax fraud, according to the Miami Herald.

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Comments

[Scott Zettlemoyer]

10:43 PM on 08/23/2012

The following is what I sent to my US Senators and Congressman tonight. Join me and others willing to embargo tax money for specific issue resolution in the future. Citizens Embargo at Facebook.

My wife and I send money to Washington through out the year with a continual dimming hope that some of the money will be used to benefit the common good. Over the past several weeks there have been major news reports that the IRS says it can not stop sending some $30+ billion dollars over the next 5 years to identity thieves and illegal immigrants that are committing fraud.
I believe the US, if it has the will, would put and end to this today. But, for some reason the will to correct such things does not seem to exist. Can you imagine a multinational for profit having this type of fraud against it and how quickly the problem would be solved? When I hear these types of stories I wonder why I should send money to the Federal government if they can not and will not be good stewards of the citizens money.
Now my question, do YOU have any concrete steps and actions planned to address this fleecing of America?

[JCJ22]

12:26 PM on 08/02/2012

This is totally unacceptable to the point of being criminal. Numerous study documents predating eFiling made the IRS fully aware of the potential for fraud with electronic filing. They had knowledge of these potential problems and opportunity to implement multiple checks to ensure that refunds are deposited only to verified recipients bank accounts, and that changes in filing credentials including address not automatically accepted by the systems. Also accepting multiple filings from the same taxpayer within a given tax year surely was a known venerability. As many pre-implementation studies and design reviews that these IRS software systems undergo this has to have been a deliberate part of the design. Taxpayers should be outraged and if the money is not recovered it should be taken from payments to contractors and employees responsible for the system.
Hundreds of honest, highly capable analyst and developers are unemployed and are turned away by the IRS and their contractors as being unqualified of for not having what it takes. This clearly demonstrates who is really incompetent and unqualified and should be fired.

[Eagleman]

11:58 PM on 05/12/2012

What do you expect from Government employees... Bunch of high school rejected idiots and lazy bums

[authorized-user]

03:40 PM on 05/11/2012

Our GOP led congress cut IRS funding by over $600 million to save the big 1% fish from audits and their attempt to block the affordable care act.

What could we do with a $26 billion savings?

[seepositives]

05:28 PM on 05/09/2012

sad that as corrupt as our internal revenue dept is, that it keeps creating and supporting more .

[deschl]

08:32 PM on 05/09/2012

how is it corrupt, and how do they create fraudsters

[firewired]

01:41 PM on 05/09/2012

Want to find out a shocking truth about where all the tax revenues are going? You WILL BE SHOCKED BY THIS!!! EVERYONE should view the following; http://www.wthr.com/video?clipId=7054149&autostart=true

THERE CAN BE NO EXCUSES FOR THIS ABUSE! NONE!

[cojames82]

10:09 PM on 05/08/2012

http://www.change.org/petitions/close-tax-loophole-for-illegal-immigrants-stop-tax-fraud-and-my-money-from-going-to-mexico

[ShellyintheWest]

03:10 PM on 05/09/2012

Thank you for posting. Odd that HP will report on fraudsters, but leaves out the illegal immigrant ones who are racking up billions too.

[gunrunner99]

01:28 PM on 08/09/2012

Not really Shelly,it is Huffpo and, they are on the illegals side so....If our laws were enforced,well,forget it,,,,,,maybe the people that hire them and want them here should have to pay back all that was taken??

[gunrunner99]

01:25 PM on 08/09/2012

Its called buying votes and, its costing a bundle.