Priorities
On March 12, with a month left to go in tax season, Senator Warner attended a Senate Finance Committee hearing where he discussed an issue that he has previously called on the IRS to address: tax refund fraud.
It is shockingly easy for crooks to file a fraudulent tax return: all they need is a name and a Social Security Number. A recent Government Accountability Office (GAO) report estimates that the IRS paid out $5.8 billion in fraudulent refunds to identity thieves in 2013. Given this dramatic increase, the Senate Finance Committee held a hearing to examine ways to protect taxpayers from phone scams, phishing, identity theft, and return preparer fraud.
Last month, Senator Warner wrote to IRS Commissioner John Koskinen asking about the agency’s ability to detect and combat fraud. Warner’s letter questions whether the IRS could detect and combat fraud by checking taxpayer refunds against employer-provided W-2 data earlier. Currently, the agency does not check taxpayer refunds against employer provided W-2 data until months after refunds are issued, creating a large window of time for thieves commit identity theft virtually undetected.
Senator Warner also noted at the hearing that the agency’s current interpretation of the law means that when the IRS does identify a fraudulent return, “if they find out that you have been the victim of identity fraud – that they don’t even tell you as a citizen that you’re the victim of that fraud and they don’t notify law enforcement.”
While Senator Warner continues to press the IRS to resolve this issue administratively, it is possible that legislation will be necessary to ensure that the IRS is a partner in efforts to identify and notify victims and law enforcement about cases of possible fraud and identity theft. Last year, Senators Warner and Ron Johnson (R-WI) teamed up to introduce a bill that would explicitly allow the IRS to alert those taxpayers who have been victims of identity theft.
“If we’re looking at $5.8 billion in fraudulent refunds [in 2013], making sure the IRS informs people when they’ve been the victims of identity theft, I think, would be a step in the right direction,” he said at the hearing.