The Internal Revenue Service is continuing to expand its efforts to detect tax refund fraud this tax season, according to a new report.
The interim report on the 2018 filing season, from the Treasury Inspector General for Tax Administration, found that as of Feb. 24, 2018, the IRS reported that it identified 9,557 tax returns with approximately $46 million claimed in fraudulent refunds and prevented $22.2 million (48.3 percent) in fraudulent refunds from being issued. In addition, the IRS said it prevented approximately 7,376 fraudulent electronically filed tax returns as of Feb. 28, 2018, and 1,442 paper-filed tax returns as of March 15, 2018, from being accepted into the processing system. The IRS also identified and confirmed 2,204 fraudulent tax returns involving identity theft as of Feb. 28, 2018, and identified 13,964 prisoner tax returns for screening as of Feb. 24, 2018.
The numbers of fraudulent returns identified and stopped declined somewhat from last year, although the total dollar amount of fraudulent refunds identified and stopped increased. The report attributed the decrease in the number of fraudulent tax refunds to the IRS’s efforts to expand processes to prevent fraudulent refunds from ever entering the tax-processing system.
The report detailed a number of other statistics on filing season through early last month. As of March 2, 2018, the IRS received approximately 61 million tax returns (with 95 percent of them electronically filed) and issued more than 48 million refunds, totaling nearly $148 billion.
In preparation for the 2018 filing season, the IRS updated its processes and procedures to address various legislative requirements from Congress. The IRS began accepting and processing individual tax returns on Jan. 29, 2018, as scheduled, but then on Feb. 9, 2018, after the filing season had already begun, Congress retroactively extended a number of tax provisions. Last week, the IRS said it was finally processing all of the tax extender returns (see IRS now processing ‘extender’ returns).
The IRS is also dealing with the tax reform overhaul that Congress passed last December, although most of the provisions won’t apply until next tax season. However, the Tax Cuts and Jobs Act expanded two provisions in the Disaster Relief Act to all individuals affected by a presidentially declared disaster during calendar year 2016. For instance, some rules were modified for claiming personal casualty loss and for taking withdrawals from retirement plans.
The most significant change in the Tax Cuts and Jobs Act affecting tax year 2017 individual returns is a temporary reduction from 10 percent to 7.5 percent in the minimum percentage for which medical expenses must exceed adjusted gross income to be eligible to claim a deduction. Due to the extensive nature of the new tax law, the IRS has established a Tax Reform Implementation Office to lead a coordinated implementation of the new tax law's provisions.
Despite the repeal of the Affordable Care Act’s individual mandate as part of the tax reform law, much of the 2010 health care reform law is still in effect, including tax credits to help taxpayers buy health insurance coverage. As of March 1, 2018, the IRS processed 1.5 million tax returns that reported nearly $7.7 billion in Premium Tax Credits that were either received in advance or claimed at the time of filing. Taxpayers received $829.3 million in Advanced Premium Tax Credits to which they were not entitled, of which $261.9 million was not required to be repaid.
In addition, the IRS held 9.4 million returns with refunds totaling $46.9 billion with an Earned Income Tax Credit or Additional Child Tax Credit claim as required. Tax returns that weren't identified by the IRS for additional review were released on or after Feb. 15, 2018.
The IRS is continuing to provide more self assistance options that taxpayers can access 24 hours a day, seven days a week when they have trouble getting through by phone to the IRS’s call centers. Those self-assistance options include the IRS2Go mobile app, YouTube channels, interactive self-help tools on IRS.gov, and Twitter, Tumblr and Facebook accounts.
Phone access to the IRS is still a challenge for many taxpayers this year, however. As of March 17, 2018, taxpayers made approximately 33 million total attempts and 23.1 million net attempts to contact the IRS by calling the various customer service toll-free phone lines. The IRS reported to TIGTA that approximately 11.8 million calls were answered via automation. IRS assistors have answered nearly 6.4 million calls and provided a 78.1 percent level of service with a six-minute average speed of answer. During fiscal year 2018, the IRS still plans to help approximately 3 million taxpayers through face-to-face contact at its local Taxpayer Assistance Centers.
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