The US International Revenue Service gave more than $5.2 billion to identity thieves in 2011, failing to detect as many as 1.5 million false tax returns.
The IRS did identify about one million false returns and blocked $6.5 billion in fraudulent refunds, but the billions that escaped its detection are causing concern over taxpayers’ security.
The agency does not verify employer W-2 forms until after refunds are issued. While taxpayers can start filing returns in January, their employers are not required to submit withholding and income documents until the end of March, leaving room for the IRS to issue refunds before it can confirm them. Additionally, the IRS often fails to flag fraudulent cases because the returns don’t score high enough to merit a closer review.
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