Watchdog Says IRS Needs To Do More To Protect Against Fraudulent Refunds

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Juliegrace Brufke Capitol Hill Reporter
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A report released Monday shows the IRS does a superbly lousy job at cross-checking for fraud.

According to the Treasury Inspector General for Tax Administration (TIGTA), a computer programming error in conjunction with employee error led to the release of $46 million in refunds for returns that had not been properly verified by the IRS during the 2014 calendar year.

While the agency’s system prevented more than $15 billion in fraud, there were still major issues found.

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“TIGTA initiated this audit because an IRS employee reported to the TIGTA Office of Investigations that the IRS was not working some taxpayer cases in which refunds were held,” TIGTA said in a statement. “The Office of Investigations identified that the IRS did not timely address these tax accounts to ensure that the refunds are not erroneously released. TIGTA assessed IRS processes to ensure that tax refunds are not erroneously released.”

The agency agreed with the watchdog’s recommendation the IRS fix its Integrity and Verification Operations function, responsible for the agency’s pre-refund fraud detection, to ensure refunds aren’t given before examiners screen them.

The IRS also agreed to TIGTA’s suggestions to develop a process to ensure its agents verify “potentially erroneous” refunds during an 11-week holding period.

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