Florida Still A Hotbed For Income Tax Refund Fraud

MIAMI, Florida -- Florida remains a hotbed for U.S. Income Tax refund fraud, according to reports released by the Treasury Inspector General for Tax Administration (TIGTA) on Thursday.

Miami, Florida topped the list of U.S. cities where TIGTA found potentially fraudulent tax returns that were missed by the Internal Revenue Service.  TIGTA believes that 37,661 returns worth over $147 million in refunds were sent to just that one city in South Florida.

When it comes to the most number of undetected fraudulent refunds sent to a single address, Orlando, Florida made the top 5 U.S. cities twice.  580 returns were sent to one Orlando address worth $870,253.  Another single Orlando address was used for 290 returns worth $466,409.

The reports also show the IRS is losing $3.6 billion a year in potentially fraudulent tax refunds.  While TIGTA did find that the IRS had improved its fraud detection efforts, TIGTA also found that:

...the IRS still does not have timely access to third-party income and withholding information needed to make substantial improvements in its detection efforts at the time tax returns are processed.  Access to third-party income and withholding information is the key to enabling the IRS to prevent the continued issuance of billions of dollars in fraudulent tax refunds...

In other words, by the time the IRS has received third-party verification, the fraudulent income tax return has already been processed and the refund issued.

The report recommended that legislation would be needed for changes to the filing deadlines so that the IRS could match employer tax information with individual taxpayer information in a timely manner to catch fraudulent returns.

U.S. Sen. Bill Nelson (D-FL) requested the investigation from TIGTA after law enforcement authorities in Florida contacted him about seeing an increase in the number of cases in Florida where people were having their identities stolen.

“While these reports show that some progress is being made in reducing tax fraud, it’s also clear that there is still much to be done,” Nelson said in a letter to the Sen. Max Baucus (D-MT), chairman of the Senate Finance Committee.


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