It’s Tax Day
You know what that means! Yep – not only are there some good tax day deals at Papa Murphys, but we are also getting to the end of fraudulent tax returns for the season.
The filing of fraudulent tax returns is exploding as the wiley fraud artists have figured out how easy it is to gain access to a victim’s credentials and file for a tax return in the victim’s name. When the IRS sends the money – they aren’t sending it to the victim.
In 2011, the IRS reported that they stopped over $1.4B in fraudulent returns. This is nearly 6 times the amount they stopped in 2010 ($247 mm). What they aren’t saying is what percentage of these “stop’s” were legitimate returns. Likewise, the FTC says that the percentage of fraud reported to them regarding tax fraud has doubled since 2008.
Unfortunately, the IRS is not well equipped to develop strong fraud detection systems. These lack of controls are not exactly the fault of the IRS either. Congress put out a mandate years ago to get the money out the door. The result is a lack of controls that is now being exposed by the fraudsters.
This is not at all surprising. The fraudster always seeks out systems with the fewest controls and the IRS is an easy target.
Over the next few days and weeks the tax fraud stories and discussion will begin to slow down in the main stream press, but watch for the activity to pick up big time on the hill in anticipation of the 2012 tax season. I would anticipate that the IRS is going to continue to come under fire to build fraud detection systems that have been in place at financial institutions for decades.