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Is the IRS assisting tax fraud?

On Behalf of | Aug 10, 2012 | Internal Revenue Service

Many Massachusetts residents would be surprised to learn that the Internal Revenue Service has been overlooking fraud. However, this may be the case. Specifically, sources say that the process is occurring when people apply for taxpayer identification numbers. Many are alarmed that the agency has skimped on financial security.

A member of the tax-writing committee has asked the IRS Commissioner to resign, claiming the agency is essentially assisting illegal immigrants defraud the government.

If you are unfamiliar with the law, non-citizens have to get ID numbers from the IRS to claim tax refunds. The potential fraud surrounds the documentation requirements for verifying the identity of those that apply for an ID number. Applicants for the ID number haven’t been required to submit certified copies of their birth certificate or other identification, which is different from the requirements to obtain a Social Security number.

However, the Treasury Department’s inspector, who evaluated the application process, indicates that IRS employees are discouraged from detecting fraudulent applications.

Specifically, the investigator found that workers have been encouraged to process as many ID applications as virtually possible. Furthermore, the inspector found that the agency no longer uses sufficient fraud-detection measures in evaluating applications.

So what does this all mean? Authorities claim that tax refunds may be going to non-qualifying individuals.

Approximately 3 million tax returns seeking $6.8 billion were filed last year using IRS ID numbers. Investigators are concerned about exactly how many of these may have been faulty.

Reports suggest that the agency has been aware of the problem since at least 2002; however, it failed to take sufficient action. There is also talk about the fact that there may have been no training in how to sift out fraudulent applications.

In response to the problems, now, IRS officials say that they have started requiring original or certified documents until new rules are developed.

Source: Huffington Post, “IRS Discouraged Fraud Detection, Treasury Says,” Josh Lederman, Aug. 8, 2012


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