Millions Of Taxpayers Will Have A Longer Wait For Tax Refunds Next Year

[Elrod]

It’s no secret that tax refund fraud is big business for scammers. The Internal Revenue Service (IRS) estimates it paid $3.1 billion in identity theft fraudulent refunds in filing season 2014. During that same time, the IRS stopped attempts to collect an additional $22.5 billion in fraudulent refunds (GAO study downloads as a pdf).

IRS Commissioner John Koskinen has noted before that stopping fraud requires IRS to be a step ahead of the scammers. Congress thinks it has a plan to do just that. There’s just one problem: in the attempt to slow tax refund fraud, millions of families may have a longer wait next tax season to get their refund.

More:....http://www.forbes.com/sites/kellyphillipserb/2016/05/15/millions-of-taxpayers-will-have-a-longer-wait-for-tax-refunds-next-year/?ss=taxes#5f5c99f7287e

 

 

[ILLMAS]

I can't remember when was the last time I had a refund.

[mcb39]

I had a client whose identity was stolen in 2014.  He actually received a letter from IRS re 2015 refund being held BEFORE his legitimate tax return was even filed.  So, they are making attempts to stop fraudulent returns.  On the other hand; all IRS agents I have spoken to; agree that the PIN system is broken and no longer of any use.  When I actually filed this particular client, using the PIN, it was rejected.  Had to contact Identity Theft Dept and go through all the hoops again.  Good side is: Thief never got the refund.

[Jack from Ohio]

Until America is cured of the addiction of the IRS savings account and demanding very fast refunds, the scammers will always have the upper hand.

To stop the scammers, force everyone to wait for refunds till June or July, giving the IRS time to data match.  Of course, all the financially irresponsible Americans (probably 80%+) will scream loud and long about discrimination and a new "war on the poor."

[Patrick Michael]

What they really should do is do away with EITC totally.  The article does not mention the millions (maybe billions) of EITC fraud that does not involve identity theft.  I'm sure I'm not the only one who has had the client who wants to use his brother, sister, grandchild, or other relative  to claim EITC because the parent already has enough qualifying children to claim the maximum EITC. Or the bogus Schedule C income or "lets not claim that expense" to increase the EITC.  I throw these people out of my office but I'm sure they just keep on shopping until they find someone who will do it or learn how answer the questions "correctly".  If the government wants to help these working poor, find a way to do it that does not involve the tax system and is easier to verify.

[ILLMAS]

Even if do our due diligence on EITC, we are not 100% sure if the client is telling the truth.

[Roberts]

2 hours ago, mcb39 said:

all IRS agents I have spoken to; agree that the PIN system is broken and no longer of any use. 

It's idiotic. To efile you either need a new PIN (which is worthless) or you must give last years AGI and PIN. Why not require last years AGI? Any tax software could roll that forward (even Turbo Tax) and if you have last years return you have it to enter manually. If they wanted to get rid of the fake return fraud, it would be exceptionally easy but they choose not to for a reason.

[Abby Normal]

Millions waited longer this year too, and I'm fine with that. Some are still waiting if their APTC did not match the 1095A. I just faxed off a corrected 1095A today.

[JohnH]

6 hours ago, ILLMAS said:

I can't remember when was the last time I had a refund.

I'm with you. If I have a refund, I made a major planning mistake during the year

 

[taxxcpa]

The IRS accepted my daughter' return Jan 13.  Her refund ($6900) will finally go into her bank account tomorrow , May 18.  All she had was her W-2 and her husband's and  itemized deductions.

[Lion EA]

My grown kids who make little in PA coal country had to send in copies of their 1095 forms (why?  it was Medicaid.  Doesn't the IRS have access to those?) and were finally told that they will receive an explanation 31 May of why their refund is being reduced by $500.  Had a baby prematurely in November, so a refund for 2015.  And, my first filer of the season, a little old man with SS and a tiny pension who's had the same amount w/h from SS for years and years just received his refund.  I don't have any returns with less income than those two.  Why doesn't the IRS chase people with huge refunds or big changes from year to year or SE income or the thieves that stole my SSN last year?!

[SaraEA]

The thieves already have a handle on obtaining PINs and last year's AGI.  I too had a client who received an IP PIN this year and his return rejected because one had already been filed.  Seems the crooks stole enough info about those whose identities they used last year to answer the "out of wallet" questions on the special IRS tool (use reserved for those issued IP PINs) to pass as the real taxpayer and get a new IP PIN.  For others who just forgot their last year's PIN or AGI, they just had to log onto another tool, enter their SS# and birthdate and get a valid PIN issued.  The thieves actually programmed computers with that info they had stolen and robotically requested PINs.  Once the IRS noticed over 700k inquiries, a "tad" over the usual usage, they shut down the site.  The "get transcript" site was shut down for similar reasons.  The IRS has tried all kinds of ways to verify the identities of the "real" taxpayer, but the criminals are always two steps ahead.  The IRS knows they are dealing with international criminal gangs who have the brainpower and resources to get what they want.  It's no longer some guy sitting at his home computer with the info his girlfriend stole from the dentist's office where she works.

I have long argued for removing the EITC from the tax system and putting it back into Social Services (where it used to be and was called "welfare").  At least there the applicants have to meet face to face with someone.  They have to bring documents to prove they are who they say they are, their kids are really their kids, really live with them.  People have to do that to apply for food stamps, housing assistance, etc.  People should bring their documents and completed returns to the Social Services office and then get approved for the money.  Tax preparers and IRS agents are trained in accounting and law,, not social work.  So let the social workers do their thing, which they are way better at than we are.

That said, removing EITC from the tax return won't eliminate the fraud.  Sure, there are the folks who hide income, hide spouses, claim kids who aren't theirs, change addresses, whatever it takes to max the EITC.  But a lot of the organized criminals don't even claim EITC because they know it gets extra scrutiny.  They make up W2 info, often with employer EINs they obtained from discarded or intercepted or purchased W2s, and file away.  A fake return filed for one of my clients last year showed income over $60k--no EITC there, but a hefty refund with the excess withholding reported. (The clients makes over $600k and if she gets a refund always applies it to her estimates.) Only holding off on all refunds until matching can be done will solve this one.  Or will it?   In CT, the Dept of Revenue Services said crooks were going so far as to register fake businesses (online of course) to obtain EINs so they could then make up W2s. If these same crooks then file the W3s, 1096s, etc, they'll still outsmart the IRS.

Maybe the only way to stop the theft is to stop refunds.  In PA, if someone is overwithheld for local taxes, they actually have to give an explanation.  The amount withheld is always the amount due (except for self-employeds).  There are no refunds.

[SaraEA]

Taxxcpa and Lion, perhaps suspicious returns were filed for these clients?  The IRS sent a letter to the fraudster requesting additional info and wouldn't process the return until they received a reply.  When your clients filed, their accounts were already flagged and that's why it took so long? We had two clients receive letters asking them to verify returns they hadn't filed yet, but both of those had to file their actual returns on paper. Your clients didn't receive letters, just experienced a delay, but there must have been a reason for it.  The IRS filters are definitely getting better.

[Jack from Ohio]

11 hours ago, Jack from Ohio said:

Until America is cured of the addiction of the IRS savings account and demanding very fast refunds, the scammers will always have the upper hand.

To stop the scammers, force everyone to wait for refunds till June or July, giving the IRS time to data match.  Of course, all the financially irresponsible Americans (probably 80%+) will scream loud and long about discrimination and a new "war on the poor."

The fraudsters will always be the winners.  America will never tolerate waiting for their savings account.  Besides, the money the fraudsters get is not theirs anyway, so why be concerned?

Our country has become so financially irresponsible that the fraudsters have an easy task.

Rant over.

[Lion EA]

Had a different client, prior year return, who received an IRS letter checking his identity.  They caught a fraudulent return.  Called CT, and they'd already removed the fraudulent return.  Very quick.  The two above, two months before any communication.  One without any explanation even when getting through to a real person, just that refund will be mailed on a certain day.  Other, no info available when speaking to a real person, just a letter that they will receive another letter 31 May.  The retired guy was calling constantly.