
By
John McConnell
Although the Internal Revenue Service (IRS) works hard to ensure
that it screens for potentially fraudulent tax returns as well as issue
refunds to genuine taxpayers all-in-one go, ensuring that the two
operations run simultaneously and effectively has proven to be more than
just challenging. In numerous occasions, the return files faultily
flagged as potentially fraudulent' have been excessive. As a result,
thousands of legitimate taxpayers have to wait longer for their tax
refunds to be processed.
What Is Causing The Delays?
According
to a the 2015 annual report by Nina E. Olson, the National Taxpayer
Advocate, the delays are caused by the high rate of false positives
generated by the tax fraud filter that the IRS uses to process tax
returns. The income wage verification program allows the IRS to withhold
refund for any taxpayer whose file has been flagged as potentially
fraudulent by the IRS fraud theft filters. Although this is a key step
in averting potential identity theft, the high number of false positives
means hundreds of thousands of honest taxpayers do not receive their
tax refunds on schedule.
Just How Bad Are The Delays?
In
2014, it was reported that around 180,000 legitimate taxpayers whose
returns were misleadingly flagged under the IRS' fraud detection system
had to wait for 18 weeks, on average, before they could finally cash out
their tax refunds. This only got worse in 2015 when the IRS started
using an electronic detection system to process tax returns. Not only
did the false positives increase by a notable 16.4% but the introduction
of the Return Review Program also increased inaccurate refund holds by
an astounding 500%. This was especially reflected by the number of
taxpayers who contacted the Taxpayer Advocate Service asking for
assistance in resolving their refund holds, which rose by 15% to the
current 36.5%. Although contacting an Advocate helped, most of these
taxpayers had to wait for an extra 8 weeks, or more, for their wrongly
withheld funds to be released.
Are The Delays Justified?
Although
we acknowledge that any tax identity theft screening method will always
generate false positives, the current false positives are unjustifiably
high and the IRS has a long way to go before they can achieve
efficiency.
Have The Efforts By IRS To Curb Tax Related Identity Theft Paid Off?
Even
with the improved identity theft screening methods, tax-related
identity theft remains an emergent problem in the United States. It is
thus advisable that the taxpayers do whatever they can to lower their
chances of falling victims. Molly Petersen, from the Montana Department
of Revenue, advises taxpayers to file their tax returns early to avoid
the likelihood that an identity thief will not beat them to it.
What Do You Do When You Fall A Victim Of Tax Related Identity Theft?
Unfortunately,
some tax payers still fall victims of tax related identity theft. If
you have been a victim, credit repair is a good place to start. Identity
theft may have resulted to the loss of your previously good credit score,
which can be daunting. Other than the dreadful experience of being
victimized, another problem that you may have to face is potential of
denied credit or very high interest rates when and if you do get credit.
Despite these and many other similar unfortunate circumstances that you
may find yourself in, credit repair could be very beneficial. The
Federal Trade Commission outlines the steps that you need to follow to
repair your credit. You may decide to go through the process alone or
you may contact a credit repair company to assist you, the best part is
that most of them will do it for free! For others, you may have to cover
some expenses. Either way, it might be relieving to know that you do
not have to be penalized for being a victim of a crime.
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