The Internal Revenue Service may have delivered more than $5 billion in refund checks to identity thieves who filed fraudulent tax returns for 2011, Treasury Department investigators said Thursday. They estimate another $21 billion could make its way to ID thieves' pockets over the next five years.
The
IRS is detecting far fewer fraudulent tax refund claims than actually
occur, according to a government audit that warned the widespread
problem could undermine public trust in the U.S. tax system. Although
the IRS detected about 940,000 fraudulent returns for last year claiming
$6.5 billion in refunds, there were potentially another 1.5 million
undetected cases of thieves seeking refunds after assuming the identity
of a dead person, child or someone else who normally wouldn't file a tax return.
In one example, investigators
found a single address in Lansing, Mich., that was used to file 2,137
separate tax returns. The IRS issued more than $3.3 million in refunds
to that address. Three addresses in Florida, the epicenter of the
identity theft crisis, filed more than 500 returns totaling more than $1
million in refunds for each address.
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