Tax Fraud Is No Surprise, Its Continuation Is

Last updated on February 13, 2012

With so many tax filing scams busted recently, and the IRS giving away millions in false tax refunds every year, there seems to be little to raise taxpayers’ eyebrows anymore. What is surprising and disturbing is the continuation of tax scams right under the nose of the IRS.

In a recently busted tax scam, the accused filed more than 220 fraudulent tax returns to cheat the IRS off $1.9 million in false tax refunds. The IRS sent out around $1.3 million to the scammer. Billions of dollars in tax refund money is lost each year to tax fraud. Between 2003 and 2011, the IRS lost from $99 billion to $119 billion in false earned income credit claims. It has no estimation of other false claims from other credits.

The IRS is hiring more employees to handle the tax filing season and claims to have tightened their security measures, but that alone will not suffice. Investigative agencies must stop tax fraud at the root.

According to Hillsborough Sheriff’s Cpl. Bruce Crumpler, “Investigating tax fraud is like going fishing; when you drop the line into the water, you think you have caught a really big fish, but when you keep casting the line, you catch more big fishes, even bigger ones.”

Providing proper resources to the IRS to fight tax fraud can be the first step to improve the tax system. It would be fair to taxpayers whose tax money is being lost to tax frauds.