How accounting is taking on the challenges of fraud

The holiday season may be a time for relaxation, but the IRS is warning taxpayers not to let their guard down following a summer wave of email and text message tax scams. 

"People are being flooded with these email and text messages, but we want them to avoid getting swept up in these terrible scams," says IRS Commissioner Danny Werfel. "Taxpayers should be wary; remember, don't click on links from questionable sources."

The list of scams with enticing subject lines such as "Claim your tax refund online" include the Economic Impact Payments scheme and the Employee Retention Tax Credit.

Read more: IRS warns of summertime tax scams 

An IRS overhaul of the business rules designed to screen out invalid claims for refundable credits has been implemented for the Child and Dependent Care Credit and the Earned Income Tax Credit.    

"The unintended consequences of refundable credits are that they can result in the issuance of improper payments and can be the target of unscrupulous individuals," said the Treasury Inspector General for Tax Administration in a report on the IRS changes.

The move will enable the IRS to identify fraudulent claims for both programs and close down "an avenue for those seeking to defraud the government."

Read more: IRS tightens filters to screen refundable credits for fraud

The IRS is continuing to actively pursue its 10-year strategic plan, including tackling spurious claims for the Employee Retention Credit as a priority, despite losing more than $20 million in federal funding.

"A $20 billion cut, but there's still $60 billion remaining, and that's $60 billion we did not have a year ago," said Douglas O'Donnell, deputy commissioner of services and enforcement at the IRS. "We still have the opportunity to truly transform the agency."

While O'Donnell believes that anything could happen, he remains confident the agency can stick to at least the first five years of its original plan. After that? "We'll see," said O'Donnell.

Read more: IRS budget cuts not stopping ERC crackdown