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H&R Block, Inc. Message Board

  • arnoldtaxinator arnoldtaxinator Aug 25, 2012 8:51 PM Flag

    Fraud and IRS Failures

    Anyone else see tonight's CNN story on tax refund fraud? I've spoken before about how easy this crime is. Now CNN has told millions more exactly and precisely how this crime is committed. Millions now know how to pull off this fraud. That is a very good thing. I am hoping that now the IRS will have to take action to stop this. It is the easiest crime in the world that will net a low-intelligence criminal more than a million dollars if they work hard at it for a couple of weeks. Will the IRS fix this problem? Only they can do it. Anonymous debit cards are a big part of the problem, and anonymous tax filing from public wi-fi hot spots are another big part of the problem. We'll see...

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    • First there were no-doc loans, so it's no surprise that no-doc tax returns have come to fruition. The brains in Washington (citing some kind of national security issue) one day may declare that individual tax returns (of course under a certain income cap) may only be filed in a certified IRS center. The rich would still be allowed to use a CPA though. Great way to combat fraud, expand the size of the Federal government and expand the powers of our police state, all in one shot!

      • 1 Reply to tackspro
      • When a person opens a bank account, they have to positively identify themselves. So a refund deposited to such an account can be traced to a real person who receives it. Why can't the IRS only allow refunds to be directly deposited to accounts or debit cards issued subsequent to making a positive identification? Or would the community organizer groups scream bloody murder because it would "discriminate" against people who don't have identification, as they do in the case of voter identification?

    • "Will the IRS fix this problem? Only they can do it."

      Arnold, this is what the taxpaying public might think, but the truth is only Congress can do it. They had to give the IRS math error authority to stop refunds from going to prisoners--IRS alerted them to the problem but had no legal authority to do anything about it. Same with the homebuyer and adoption credits once they became refundable. IRS had to pay first and ask for proof later until Congress tweaked the law (and had to backtrack on another law pushing the IRS to increase efiling) so the service could demand paperwork (and thus a mail-in return) before paying.

      I agree that the anonymous debit card made fraud so much easier. The IRS piloted a debit card of its own in limited places one tax year but ended the trial. Maybe the best solution is to do away with self-selected PINs and issue official ones to taxpayers. I can imagine the chaos, though, for those many clients who can't even find their property taxes two weeks after they paid them trying to find their letters with their official PIN.

      In my opinion the best fix is to take refundable credits out of the IRS and put them in agencies that already work face-to-face with the public. If you're eligible for EITC, take your completed tax return to the Dept of Social Services, along with your kids' SS cards, birth certificates, etc (just like people currently to do get food stamps, TANF, etc.) and get your money there. Social Services should be able to handle the CTC the same way. Adoption credits could be doled out by the US agencies that approve the final paperwork. Comments?

      • 1 Reply to wishfulthinkin27
      • Refundable credits have nothing to do with this problem. If I know your Name and SS# I can dummy up a W-2 showing you made $80k with $15k in withholdings, lots of itemized deductions, and a $10k tax refund. I don't need any refundable credits to gin up a fake return and get a big bundle of cash loaded on a debit card not tied to a verified individual. And I can file it anonymously from the local Starbucks.

        IRS interprets and implements the tax code. Congress has not required them to issue refunds anonymously to people whose addresses and identities have not been verified. Some single-residence addresses have had 750 or more tax returns filed from them. Congress has not required this. The IRS has been inept and foreseeing the problems caused by the laxity of their efile and refund policies.

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