Report: billions in potentially fraudulent refunds paid - WFLA News Channel 8

Report: billions in potentially fraudulent refunds paid

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Billions of dollars in potentially fraudulent tax refunds continue to be paid out by the IRS, according to a new report released Thursday.

The report, from the Treasury Inspector General for Tax Administration (TIGTA), was requested by Sen. Bill Nelson (D-FL), who has filed legislation to increase penalties for tax refund fraud and limit the amount of time it takes to resolve cases for identity theft victims.

TIGTA says that the IRS has expanded efforts to detect identity theft, but that the IRS does not know the full scope of the fraud.

The report identified what TIGTA considers "the key" to preventing the payout of fraudulent returns as a change in the timing for the IRS to get access to "third-party income and withholding information" – such as W-2 forms.

Currently, the IRS doesn't receive those forms until later in the season, when many fraudulent refunds have already been issued.

The report also suggested limiting the number of refunds that can put deposited by direct deposit into one bank account or onto one debit card. The IRS is considering that recommendation.

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