There has been a surge in the number of fraudulent tax returns in the last few years. Because of the budget constraints, the IRS has been unable to effectively fight the problem which has emboldened identity thieves to steal identities for the purpose of filing fraudulent tax returns.
In 2008, there were 51,700 confirmed cases of tax-refund identity theft in the United States. By 2011, the number was 1.1 million, and those are just the cases the IRS knows about. An audit by the Treasury Inspector General for Tax Administration (TIGTA) earlier this year estimated another 1.5 million potential cases in which thieves stole identities for the purpose of getting fraudulent refunds. And IRS could give out $21 billion dollars in fraudulent refunds in just the next five years if the agency doesn’t find a way to crack down, according to TIGTA.
The IRS estimated it would need another $32 million to investigate those 1.5 million potentially fraudulent returns from 2011 — money it doesn’t have right now, and doesn’t appear to be forthcoming.