Identity Theft May Cost IRS $21 Billion Over Next 5 Years

alphadogg writes "A new audit of the Internal Revenue Service has found the agency paid refunds to criminals who filed false tax returns, in some cases on behalf of people who had died, according to the Treasury Inspector General for Tax Administration (TIGTA), which is part of the U.S. Treasury. The IRS stands to lose as much as $21 billion in revenue over the next five years due to identity theft, according to TIGTA's audit (PDF), dated July 19 but publicized on Thursday. 'While the IRS does not have access to all third-party information documents at the time tax returns are filed, some third-party information is available. However, the IRS has not developed processes to obtain and use this third-party information."

Good thing we cut the IRS budget

[GodfatherofSoul]

Can't have the revenue man collecting taxes or anything like that.

Re:The IRS also gains money from identity theft

[Anonymous Coward]

This is part of the reason we need to stop calling this identity theft and start calling it what it really is: Tax fraud. Same with banks. Someone pretends to be me and tricks the bank into given them money, it's bank fraud. My identity wasn't stolen. I'm just fine. The bank made a mistake and they need to clean up the mess not me. Calling it identity fraud puts the blame on me instead of the bank who made the mistake.

Re:Why 5 Years?

[PPH]

And some people move around a lot. So the con artists pose as transient laborers or some other group without a solid trail of identity.

The problem with all of the proposed solutions is that: In order to weed out the fraud, the new measures will impose onerous reporting/tracking requirements on the entire taxpaying population. And the additional burden will be placed upon us with no compensation or credit for our wasted time.

Perhaps its time to dump income tax entirely and collect revenue from businesses. They already have detailed reporting requirements and operate in an environment with no rights save those for which they have been granted permission. It's more difficult to chase individuals who are presumed to have the rights to any activity aside from those constitutionally or statutorily denied.