April 04, 1995
IRS Anti-Fraud Efforts
Meeting with Success
The Internal Revenue Service's efforts to combat refund fraud
during this tax filing season are on schedule and paying off. The IRS has processed 38.3
million full refunds, 2.6 million partial refunds and has delayed 2.6 million others due
to extra reviews to stop false refund claims.
"We have received many positive responses to our fraud prevention efforts,"
IRS Commissioner Margaret Milner Richardson said. "I believe that most taxpayers
understand that the IRS needs the additional time to verify the accuracy of refunds
claimed to maintain the integrity of the tax system and to make certain that those who are
entitled to refunds get them and those who are not do not."
A key element of the anti-fraud effort is a stricter verification of names and Social
Security numbers (SSNs) for taxpayers and their dependents. Since last summer, the IRS has
urged taxpayers to use correct SSNs on their tax forms.
The IRS has found 3.9 million instances of missing, invalid or duplicate SSNs on
electronic returns this year, resulting in rejections of the affected returns. Many filers
were able to correct the errors and re-transmit the returns in a few days. SSN problems on
paper returns may delay refunds for several weeks while the IRS resolves the matter with
The IRS is also making extra checks on certain returns claiming items such as the
Earned Income Tax Credit (EITC) and the motor fuel tax credit. In some cases, refunds are
being sent in two installments, with the portion of the refund resulting from the claimed
credit being delayed pending review. If the IRS finds no problem, it is sending the
delayed refund within eight weeks after notifying the taxpayer of the delay.
Among the schemes uncovered so far were:
- one tax preparer who used a phony SSN over 400 times, claiming over $380,000 in refunds;
- a preparer who filed over 270 paper and electronic returns with inflated itemized
- over 100 returns with similar surnames and addresses, reporting self-employment income
and claiming m; the maximum EITC, trying to get over $200,000 in refunds.
The IRS expects to delay around 7 million refunds, about eight percent of the 82
million it will send this year. Some taxpayers with complete and accurate returns may have
their refunds delayed because of similarities to suspect returns.
"We regret any inconvenience," Commissioner Richardson said. "Taxpayers
with legitimate hardships resulting from refund delays may get help through our Problem
Resolution Program by calling 1-800-829-1040."
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