Tax-related identity theft could be costing the U.S. government more than the IRS has reported, according to a new report by the Treasury inspector general for tax administration.
While the IRS identified about 1 million false returns and blocked about $6.5 billion in fraudulent refunds during 2011, the inspector general's report estimates that as many as 1.5 million additional returns claiming $5.2 billion in fraudulent refunds might have escaped detection.
Hundreds of the potentially false returns for tax year 2010 claiming the same addresses were sent from cities across the country, including Chicago, Tampa and Orlando, according to the review. One address in Lansing, Mich. was used to file more than 2,000 returns claiming more than $3 million in refunds, Tigta said.
The report adds to growing concerns about identity theft in the tax system. As Congress has created more breaks, credits and other programs allowing taxpayers to collect refunds from the IRS – and as electronic fund transfers have speeded up payments – the potential payoffs have grown for crooks. Easy access to basic information such as the Social Security numbers of deceased people has added to the problem.
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