Tax Fraud Prevention

A recent audit of the IRS
revealed some very disturbing information regarding tax refunds this past
year. It appears there was around 4
billion dollars fraudulently refunded to identity thieves. Some of the mistakes in processing make
you really call into question the common sense of the IRS. For example, there were over 655
refunds that were sent to the same address in Lithuania. The report went on to explain that
there were 1.1 million refunds that were sent to individuals who used stolen
Social Security numbers. The
average time it took to correctly remedy the stolen SSN predicament was over 10
months. All in all, the fraud cost
taxpayers around $3.6 billion.

Obviously, there is a
problem. In defense of the IRS,
they are trying to take the right steps to remedy this issue. They now have
over 3,000 employers working specifically on the issue of identity theft compared
to 1,500 previously. They are also deploying some new screening filters.

I commend the IRS for
taking some steps in the right direction, but Im curious as to why they are so
lax in the verification process. There should be more regulations passed down
to the tax preparation companies and CPAs. If there is a known issue with SSN
fraud, why dont they require
SSN verification and some type of authentication process, such as Knowledge
Based Authentication with electronic filing? I know that sometimes problems are more complex than they
appear, but in this case, deploying some type of
identity and authentication system seems like the simple solution.

There are many different
verification processes to assist with these issues. Whether its drivers
license verification or SSN verification, the IRS should be more proactive with
implementing stronger measures to protect citizens.

[Contributed by Shea Allen, Account Specialist]

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