In the past few years, the IRS has made considerable efforts to reduce the number of fraudulent tax returns it unwittingly processes annually, but millions may still be issued, costing taxpayers billions.
Last year alone, the IRS may have allowed as many as 1.5 million fraudulent tax refunds fall through the cracks, paying out more than $5.2 billion on them, according to new data from the U.S. Treasury Inspector General for Tax Administration
. As a consequence of these losses, and the IRS's continued inability to catch all of them - which itself is a sizable task - the agency could pay out more than $21 billion in possibly fraudulent returns over the next five years.
As a consequence, TIGTA recommended that the IRS do more to detect these problematic and potentially fraudulent returns before it issues refunds for them, the report said. This could include using third-party data to confirm salaries and other information listed on possibly bogus returns, and better identify common issues that appear on recognized fraudulent documents. Adam Levin
, chairman for Identity Theft
911, has a blog about the ways in which consumers can better protect themselves from this type of fraud.
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