By: Michael Cohn
The Internal Revenue Service’s expanded use of controls this tax season to identify fraudulent refund claims before accepting them into its processing system has allowed the IRS to identify approximately 35,000 fraudulent e-filed tax returns and 741 paper tax returns as of Feb. 29, 2016, according to a new government report.
The report, from the Treasury Inspector General for Tax Administration, said the IRS also identified and confirmed 31,578 fraudulent tax returns involving identity theft as of Feb. 29, 2016, and identified 20,224 prisoner tax returns for screening as of March 5, 2016.
TIGTA released its annual interim report Thursday on the IRS’s performance during tax-filing season, defined as the period from January 1 through mid-April. TIGTA plans to issue the final results of its analysis of the 2016 filing season in September.
State tax authorities have also been stepping up the battle against identity theft and tax fraud, in line with the IRS’s Security Summit and Taxes.Security.Together public awareness campaign. New York State Governor Andrew M. Cuomo announced Thursday that the New York State Department of Taxation and Finance stopped more than 239,000 suspicious refund claims during the income tax season. As a result, the department saved taxpayers $400 million—an increase of 18 percent over the same time period last year.
“We have zero tolerance for those who seek to cheat the system at the expense of hard-working New Yorkers,” Cuomo said in a statement. “By using first-rate technology, this administration is cracking down on would-be scammers and stopping this fraud right in its tracks.”
The TIGTA report acknowledged the IRS was challenged by Congress’s late passage of legislation last December extending a number of expired tax provisions. To reduce the impact on the filing season, the IRS monitored the status of the legislation and took steps to implement the extension of these provisions prior to their enactment. These efforts enabled the IRS to begin accepting and processing individual tax returns on Jan. 19, 2016, as originally scheduled.
As of March 4, 2016, the IRS received approximately 67 million tax returns, of which 62.6 million (93.9 percent) were filed electronically and 4 million (6.1 percent) were filed on paper. The IRS has issued 53.5 million refunds totaling more than $160 billion.
In addition, as of Feb. 25, 2016, the IRS processed 1.4 million tax returns that reported $4.4 billion in Premium Tax Credits that were either received in advance or claimed at the time of filing. More than 2.7 million taxpayers reported shared responsibility payments totaling $1 billion for not maintaining required health insurance coverage.
As of March 5, 2016, approximately 46.1 million taxpayers contacted the IRS by calling the agency’s various Customer Account Services function’s toll-free telephone assistance lines. IRS assistors have answered 7.3 million calls and provided a 72.8 percent level of service, with a 9.6 minute average speed of answering calls.
That was a big improvement over last filing season thanks to $290 million in extra funding from Congress earmarked toward improved taxpayer service, cybersecurity and efforts against identity theft. The Government Accountability Office reported earlier this month that the level of service this tax season was 76 percent, a 33 percentage point increase over last year, while the average wait time dropped to 9 minutes, an improvement of about 70 percent from last year (see IRS Funding Boost Helped Taxpayer Service). The extra funding enabled the IRS to hire 1,000 temporary employees this tax season, but IRS Commissioner John Koskinen predicted the service level would drop to 47 percent for the full year once the temporary employees were gone (see IRS Improves Phone Call Responsiveness).
During fiscal year 2016, the IRS plans to assist 4.7 million taxpayers through face-to-face contact at its walk-in Taxpayer Assistance Centers, which is a 16 percent decrease from fiscal year 2015. The IRS also continues to offer self-assistance options that taxpayers can access 24 hours a day, seven days a week, including its IRS2Go app; YouTube channels; interactive self-help tools on IRS.gov; and Twitter, Tumblr and Facebook accounts.