Identity theft is having a much larger impact on tax administration than the amount the Internal Revenue Service detects and prevents, according to a new report.
TIGTA Inspector General J. Russell George noted that the IRS has expanded its efforts to detect and prevent identity theft, but added that the report found multiple reasons for the IRS's inability to detect billions of dollars in fraud. "As identity theft is the most frequent consumer complaint, and at a time when every dollar counts, these results are extremely troubling," he said. “Undetected tax refund fraud results in significant unintended federal outlays and has the potential to erode taxpayer confidence in our nation's system of tax administration.” TIGTA initiated its audit at the request of the chairman of the Senate Finance Committee's Subcommittee on Fiscal Responsibility and Economic Growth. The overall objective of the review was to evaluate the effectiveness of the IRS's efforts to identify and prevent fraudulent tax refunds resulting from identity theft.
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