IRS Tax Refund Fraud 2009 – 2011

With increasing use of online facilities to file tax returns and obtain tax refunds comes a spike in identity theft cases. Most of the time identity thieves steal other people’s identities to claim their tax refunds especially during tax season. These thieves obtain information like Social Security numbers, names and other personal particulars at places where such information is kept for example in hospitals, government departments or other public places. Some even use the names of deceased individuals.

This year, more than 83% of taxpayers filed their tax returns electronically. Most of these would be entitled to tax refunds which are also sent electronically. This makes it more convenient for identity thieves to siphon the tax refunds of legitimate taxpayers as no physical check changes hands.
The IRS has been taking various fraud detecting measures to nab identity thieves who steal tax refunds of other taxpayers. Due to these measures taken, a significant number of such cases have been identified. As of April 28 this year, the IRS managed to identify tax returns with $6.4 billion in fraudulent tax refunds was successful in preventing the issuance of $6.1 billion of those refunds. The IRS also identified for fraud screening 210,473 prisoner tax returns, a 5.3% increase compared with last year.

Here is a summary in tabular form of the number of fraudulent tax returns and the number the IRS managed to stop.

Processing
Year
Number of 
fraudulent refund
returns identified
Number of 
fraudulent refund
returns stopped
Amount of 
fraudulent 
refunds identified
Amount of 
fraudulent 
refunds stopped
2009 457, 369 369,257 $2,988,945,590 $2,571,094,116
2010 971,511 881,303 $7,300,996,194 $6,931,931,314
2011 2,176,657 1,756,242 $16,186,395,218 $14,353,795,007

 

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