by: Mike Miller
5/4/2019

Identity theft and tax fraud are so pervasive, that sponsoring online theft awareness classes could save the Internal Revenue Service millions of dollars. This is the 6th in a series of blogs looking at the problem of tax fraud.

With tax fraud being so rampant the fundamental question is why does the IRS persist in issuing refunds before being certain the money is going to the legitimate taxpayer? As reported in www.bostonglobe.com.

The answer speaks volumes about the outdated nature of the IRS system of processing returns, and the political pressure to get refunds quickly to taxpayers.

How crazy is this? Under the current system, the IRS cannot always be certain that a return is filed by the person whose name and Social Security number is on it, but it often pays the refund anyway.

Here is a simple way to stop most of the fraudulent refunds: prevent any payments from being sent until after the April 15 filing deadline has passed.

That would enable the IRS to recognize that more than one person is using the same Social Security number for a return, and prompt the agency to investigate which one is legitimate. However, once again the US Congress is part of the problem and not the solution. The IRS follows a congressional mandate to pay refunds as soon as possible after a return is received, often within days. While that has been promoted as efficient service, it also has prompted criminals to file false returns as soon as tax filing season begins, hoping to get a refund before the real taxpayer even thinks about filing.