Identity Thieves Collected Billions In IRS Refunds

The IRS refunded nearly $4 billion to potential identity thieves in tax year 2011.

That was the conclusion of a recent report from the agency’s inspector general.

The federal tax collecting agency even sent 655 refunds (totaling $220,489) to one address in Lithuania and 343 refunds ($156,533) to one address Shanghai, China. An address in Orlando, Fla., received 580 refunds ($870,253). The IG’s office found a total of 1.1 million potentially fraudulent tax returns that slipped by IRS agents. The report also noted that “the IRS still has not taken actions to prevent multiple tax refunds from being deposited to the same bank account. This continues to provide identity thieves with an easy method to obtain fraudulent tax refunds.”

There was some good news, if you call it that, in that the IRS issued over $5 billion in bogus refunds in tax year 2010. The IRS claims it has put additional procedures in place to flag fraudulent returns. The report acknowledged that detection has improved, but “identity theft continues to result in billions of dollars in potentially fraudulent tax returns.”

Thieves generally use valid but stolen Social Security numbers or instead file with Individual Taxpayer Identification Numbers. According to USA Today, “An ITIN looks like a Social Security number, but it’s used by people — usually legal and illegal immigrants — who aren’t eligible for a Social Security number.”

Added USA Today: “One reason this fraud happens is that the scammers file the returns even before the IRS receives withholding statements directly from employers and other sources of income.”

J. Robert George, the Treasury Inspector General for Tax Administration, declared earlier this month that “Identity theft is a growing epidemic.”

The Inquisitr previously reported that the Internal Revenue Service sent $46.3 million in tax refunds to nearly 24,000 persons supposedly living at one Atlanta address through the 2011 processing year. Other “crowdfunding” locations included Oxnard, Calif., Raleigh, N.C., Phoenix, Palm Beach, Fla., and San Jose, Calif.

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