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Last updated on Tuesday, November 22, 2016
(WASHINGTON, DC) - Senator Dan Coats (R-Ind.), chairman of the Joint Economic Committee, today delivered his 53rd Waste of the Week examining identity theft tax refund fraud, which has resulted in the Internal Revenue Service (IRS) paying criminals $23 billion between 2011 and 2014.
"Let that sink in--$23 billion paid out by the federal government to criminals in only four years," said Coats. "And that's just the fraud the IRS found."
"These criminals are getting more sophisticated, making it harder for the IRS to track down and next to impossible for the government to recover those funds," said Coats. "There is no silver bullet for addressing identity theft tax fraud, and the IRS has detected and prevented numerous attempts of ID theft related tax fraud. However, there is more that can and should be done."
This theft occurs when criminals gain access to someone else's personal information, such as a name and Social Security Number, in order to steal the tax refund owed to hardworking Americans. Often, criminals file someone else's tax return before the victim does, so the IRS sends the tax refund to the criminals instead of the workers that earned and are owed the money. When such abuses happen, not only is the IRS unknowingly paying criminals, but the real tax refunds are denied or seriously delayed to millions of hardworking Americans.
Coats called for the IRS' data security system to be updated to comply with the federal government's own security standards. According to the Treasury Inspector General for Tax Administration, three different federal agencies have data security requirements for the federal government and the IRS' data system doesn't fully comply with any of them. Additionally, the Government Accountability Office (GAO) testified at a Senate Finance Committee hearing in April that there are nearly 100 unimplemented recommendations that GAO has made to the IRS to improve data security, and over half of these recommendations are over a year old.
"Another obvious way to prevent fraud suggested by government watchdogs is for the IRS to first receive employer W-2 tax forms before issuing refunds," said Coats. "Fortunately, Congress corrected part of this issue through legislation that was enacted at the end of 2015, which I supported. This legislation accelerated the issuance of W-2s to the IRS so the IRS can verify the validity of the return and the filer."
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