With tax season underway millions of Americans are preparing to file their returns and so are the identity thieves. In recent years, there has been an explosion of tax fraud in the United States with criminals filing false returns and stealing billion, yes billions, in false or misdirected tax refunds. Today, tax fraud is the third largest source of theft of federal funds behind Medicare/Medicaid and unemployment insurance fraud. In 2011, there were more than 1.1 million cases of tax identity theft compared to the 51,700 cases in 2008.
Why this explosion in tax-fraud cases?
Because American taxpayers have taken to electronically filing their returns and having refunds be directly deposited for the sake of convenience. In 2012 more than 80% of taxpayers filed their return electronically meeting a goal set by Congress back in 1998. This transferred the majority of the tax filing burden from the IRS to the taxpayer and saves millions of pages of paper each year. E-filing, while convenient for the taxpayer, has also made it easier for criminals to file and get a fraudulent refund because there is not singed forms, envelopes, or fingerprints and refunds are given quicker via automatic deposit or pre-paid debit cards.
Tax-fraud from behind bars?
Yes, you read correctly. Last year, convicted criminals residing in prisons across the country filed more than 173,000 fraudulent tax returns! Fortunately for the American taxpayer, the IRS uncovered the scandal and blocked the tax refunds. A false return filed by inmates has also been on the rise. In 2010 there were 77,000, in 2011 there were 168,000, and 2012 saw more that 173,000. Many of these inmates who are filing tax returns were put into prison for the tax fraud in the first place and are continuing to break the law from behind bars. The Department of the Treasury says that the IRS and prison officials are working together to curb tax fraud in the prison system, but also says that more needs to be done to stop tax fraud from behind bars.
Is the IRS doing enough to prevent tax fraud? What do you think should be done about the increasing cases of tax fraud in the United States? Comment Below!
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