New data released yesterday by the Government Accountability Office (GAO) revealed that the IRS issued approximately $5.8 billion in fraudulent refunds during the 2013 filing season – $600 million more than previously estimated.
As Sen. Warner wrote in a letter to IRS Commissioner John Koskinen this week, “Data thieves only need a taxpayer’s name and Social Security Number (SSN) to perpetuate a fraudulent refund. Last year alone, hackers stole more than 6.5 million Social Security numbers.”
Warner’s letter questions whether the IRS could detect and combat fraud by checking taxpayer refunds against employer-provided W-2 data – something the agency currently does not do until July, months after potentially fraudulent refunds have already been issued.
Sen. Warner also pressed the agency on its process for notifying taxpayers and law enforcement when the IRS identifies a case of potential fraud.
“The IRS often uncovers an incident of identity theft before the victim does when a data thief files a fraudulent tax return using a stolen SSN. Unfortunately, the agency has interpreted privacy laws as prohibiting the IRS from warning taxpayers that their SSN may have been stolen,” Sen. Warner wrote. “Senator Johnson and I have introduced legislation to address this problem by giving the IRS explicit authority to disclose certain information to law enforcement in cases of identity theft; however, it is my hope that the IRS will be able to address this administratively and without legislation to help victims of identity theft.”