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Not Surprising
Beth, if the numbers have increased 258% from 2001 to 2008, the amazing stat is that it has increased no more than that!!
Consider 1) Our lack of enforcement of illegal immigrants 2) Our increased tax benefits for earned income credit and other refundable credits. I would have to say the base for fraudulent SS# has increased 258% as well.
The second article says that the IRS has pursued these fraudulent and irregular SS numbers by relying on third party matching information, but that ALL OF THE TAX PROVISIONS WOULD BE VERIFIABLE THROUGH AN AUDIT OF THE TAXPAYERS RECORDS. Finally!! Someone other than me confirms that if they relied on getting off their butt and getting out into the field to audit, their results would be much better than depending on antiquated computer matching in cushy offices. -
About these links,
I want to comment on the gist of them.Originally posted by BHoffman View Post
ITIN:
...TIGTA reported that ITIN filers are receiving billions of dollars in Additional Child Tax Credits...even though...not authorized to work in the U.S...ITINs were used multiple times on tax returns...refunds...totaling...$202 million... IRS employees are required to process ITIN applications even when the applicant appears to be using another individual’s Social Security Number...IRS disagreed with (TIGTA's) recommendation[/b]...stating that such returns are subject to audit...TIGTA...believes...controls should be implemented during processing, before tax refunds are issued, since only a small number of ITIN returns are subject to audit...
Obvious remedy, of course, is to check prior to refund since, even if audited, the odds of later collecting a several thousand dollar refund from a transient, itinerant worker are next to zero.
FTHB:
TIGTA...found...taxpayers claimed $139.4 million in credits for homes they had not yet purchased...70,005 taxpayers claimed...$479 million...despite indications that they were not first-time homebuyers...TIGTA recommended...IRS require...documentation to verify a home purchase...IRS disagreed with...recommendations...TIGTA is blaming the IRS’s inaction on its recommendations for the large number of fraudulent credits. "...said George...IRS should immediately implement TIGTA's recommendations...to prevent further fraud and abuse..."
Since they're now requiring documents, Congress apparently adopted TIGTA's recommendation over IRS' objection.
The thing is -- for some reason it seems like IRS doesn't want to check this kind of stuff. And TIGTA's solutions are so clear, obvious, and logical that it simply defies common sense not to implement them.
Here's another example I read about last year: TIGTA checked recent prior years and found that thousands of imprisoned convicts were filing as Head of Household and claiming EIC. IRS collected a token amount back, but said that they had insufficient personnel to pursue the matter.
It's just amazing to me they'll expend audit-time wrestling us over mileage deductions, but don't have time to disallow prisoners' HH status (where's the kid?). It would be like picking money up off the ground. I wonder if it's like the politicians' view of EIC which Snag commented about recently; that is, "Do not disturb poor and/or disadvantaged folks."Comment
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The government doesn't have the manpower to get out and audit.
The IRS is going to be showing up at tax preparer's offices in order to properly educate them on the due diligence rules for EIC. It is more cost efficient for the IRS to be able to examine a lot of tax returns at a preparer's office without the legal messiness of opening up an audit on each taxpayer. And that's what they are doing. I hope this will discourage the bad preparers from aiding and abetting the EIC ripoff crowd.
However, I think it's apparent that the system of reporting is bad. IMHO, they need to fix that, not do more auditing of taxpayers or punishing of tax preparers. IMHO, employers might be made responsible for administering the EIC at the paycheck level via the advanced EIC.
Regarding the ITIN problem: Why can't ITINs start with the number 9 so that employers know it's an ITIN and not a SSN?
"Verifying specific eligibility requirements for the 39 provisions in question would require the IRS to request specific documentation from the taxpayer." Well, what's wrong with that? Sure the IRS wouldn't have the manpower to actually examine all of it, but requiring documentation would probably weed out some baddies who might lie on a tax return but would draw the line at actually forging HUD-1 statements or other paperwork. At least make getting that "free" money as difficult as getting a rebate. At least make people send in a boxtop or two.
Merry Christmas
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Auditor shortage
Yes, it is well known that IRS does not have the manpower to get out into the field in numbers. But my point is, they are not getting out there AT ALL. Oh sure, they are out there for small businesses and people making high incomes, but there is more rampant fraud.
I guess having lived in towns of 10,000 people or less, I have enough first-hand knowledge about what does and doesn't happen. Word gets around effectively in these environs, much more so than in huge population centers.
All that would be necessary would be to audit 3-4 taxpayers of the EIC ilk, and discover the fake SS#s, the lying HH status, the non-existent support, etc. The rest of these folks would not DARE participate in these shenanigans. 3-4 EIC audits in a town of 10,000 is not much to expect of the almighty IRS.
They prefer instead a sinister plot to regulate preparers into being auditors themselves. I am not opposed to Ms Hoffman's support of documentation to be required of preparers, or crackdown on dishonest practitioners who "aid and abet" EIC fraud. But the problem is most of us don't really KNOW when we're being lied to, and can react only when the most absurd information is presented to us.Last edited by Snaggletooth; 12-24-2009, 06:42 PM.Comment
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