The IRS paid $5.2 billion in “fraudulent identity theft refunds” last year, a Government Accountability Office analysis has revealed.
In a report issued Monday, the GAO said the IRS stopped $24.2 billion in theft, but the extent of the fraud is “unknown.”
The 50-page report came with a set of recommendations for reducing fraud, including allowing the IRS to send more refunds electronically and consider shifting W-2 filing deadlines.
The report was compiled by the GAO at the request of the Senate Finance Committee and House Ways and Means Committee.
Senate lawmakers Monday said the report signals that the agency is in need of serious reform in order to protect taxpayers from security breaches and rampant fraud.
“The American people should be able to trust the IRS to protect their identities, preserve their privacy, and ensure their hard-earned money isn’t being carelessly flushed down the drain. Sadly, that’s not the case,” Sen. Orrin Hatch, the top Republican on the Senate Finance Committee said in response to the report.
House Ways and Means Committee Chairman Dave Camp, R-Mich., pointed to one case where the IRS sent $3.3 million in refunds to a single address.
“That is not just a simple error, that is clear mismanagement,” Camp, who has outlined his own tax reform plan, said. “IRS must ensure that all is being done to stop detect fraudulent payments, protect hard-earned taxpayer dollars, and stop the crime of tax fraud.”
The GAO report recommends that Congress should weigh whether to allow the IRS to lower the number of electronic returns from 250 to between five and 10 returns. The GAO said W-2 filing deadlines should be moved to Jan. 31, which they said, “would provide a useful tool for the IRS to detect and prevent refund fraud.”
