IRS Allowed Fraud When they Rushed to Issue ID Numbers

The IRS is currently in the hot seat after a scathing Treasury Department report shows they rushed too quickly to issue identification numbers to non-U.S. residents then didn’t detect the millions in tax fraud this hurried pace caused. In their recent article: IRS Allowed Fraud in Rush to Issue ID Numbers, Audit Says, Bloomberg reports that the Treasury audit highlighted an IRS Agency emphasis on processing applications, while also creating an environment that did not allow employees to stop potentially fraudulent applications from getting through. As a result, the following major mistakes occurred:

  • 15,795 numbers were assigned to a single address in Phoenix.
  • In 2011, four addresses in Atlanta received a total of $52.5 million in tax refunds using nonresidents’ numbers.

The IRS gives individual taxpayer ID numbers to filers not entitled to Social Security numbers. Often nonresidents not authorized to work in the U.S., have tax filing obligations and pay IRS taxes. Individuals with the numbers are able to claim certain refundable tax credits or if tempted, file false tax returns to claim refunds regardless of their immigration status.

Treasury’s Inspector General of tax Administration, Russell George is calling for the IRS to make “significant systematic changes” to prevent future tax problems like this from occurring primarily due to the amount of money that is at stake. In 2011, the IRS processed more than 2.9 million tax returns with the ID numbers and sent $6.8 billion in tax refunds.

IRS spokeswoman, Michelle Eldridge said that the entire program would undergo a “comprehensive review” stating that new measures will be put in place to scrutinize new applications for ID numbers as a way to prevent IRS issues. One new measure announced in June, requires all applicants to submit original identification documents instead of notarized copies.

Peggy Bogadi, IRS commissioner of the wage and investment division, said that they are “in the process of reinforcing to our employees and managers the critical importance of the integrity of this program to ensure that our recent improvements to the program are sustained.” Her statement might just be a little too late for IRS Chief, Doug Schulman who is currently taking heat on this matter from Congress.

While the IRS appears to be in hot water, don’t think for one moment they will let you get away from your IRS tax problems. If you owe thousands in back taxes but have done nothing about it, you are encouraged to hire expert tax audit representation to help your case. Not only can they help you reduce IRS penalties you may have incurred, they can also help negotiate an IRS tax settlement that you can live with and that resolves your tax issues for good.

More Tax Help, IRS News and Tax Relief Tips:

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One Response to “IRS Allowed Fraud When they Rushed to Issue ID Numbers”

  1. Tax Relief Weekly News Round Up - July 2012 Says:

    [...] Tax Fraud continues to be the number one tax issue facing the IRS. This week, however the Agency found itself in the hot seat after a government report revealed that the IRS allowed millions in fraudulent returns to be processed without detection. On Wednesday, the Treasury Inspector General released a report critical of the IRS sighting that they rushed too quickly to issue identification numbers to non-U.S. residents then didn’t detect the millions in tax fraud their processing haste caused. The Bloomberg News article IRS Allowed Fraud in Rush to Issue ID Numbers, Audit Says provides more details. [...]

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