GAO says action needed to combat tax refund fraud

The Internal Revenue Service (IRS) must take bold and innovative action to combat more than $5 billion in fraudulent identity theft tax refunds, according to a report released on Monday that was requested by Sens. Susan Collins (R-Maine), Orrin Hatch (R-Utah) and other leaders of the Senate Finance and Aging Committees as well as the House Ways and Means Committee.

The report by the Government Accountability Office (GAO) finds that the IRS should take additional steps to strengthen its pre-refund and anti-fraud efforts to effectively stop tax refund fraud before it even starts.

“Despite efforts to prevent tax refunds from being paid to con artists who have stolen the identities of taxpayers, the IRS paid $5.2 billion in refunds based on fraudulent tax returns in 2013,” Collins, a ranking member of the Senate Aging Committee, said. “These fraudulent tax refund payments waste taxpayer dollars and jeopardize the legitimate refunds of taxpayers.”

Hatch, the Finance Committee ranking member, said American people should be able to trust the IRS to protect their identities and preserve their privacy.

“Sadly, that’s not the case,” Hatch said. “As the GAO made clear today, there is more that can be done to improve the agency’s anti-fraud capabilities.”