In 2012, identity theft and tax refund fraud spiked to record levels. Fraudsters used stolen taxpayer identification information to file tax returns with fraudulent income amounts, bilking the Internal Revenue Service, or IRS, out of billions.
As tax season 2013 kicks into high gear, the IRS is telling filers they are prepared to deal with anyone attempting to file a fraudulent tax return.
Tax refund fraud has become a widespread crime. Inmates operating in prisons have filed tens of thousands of these refunds, pocketing millions while behind bars. Florida has lead the nation in the number of inmates caught filing fraudulent returns and the amount stolen.
To combat this new wave of crime, the IRS has spent the past two years working with the Department of Justice and state agencies to develop a framework for detection and prevention of fraudulent claims being processed. Another aspect is the detention and arrest of those filing false returns.
In 2012, the IRS claims to have prevented $20 billion in fraudulent tax refunds from being issued, up from $14 billion in 2011. The IRS is prepared to stop even more from winding up in the hands of scammers in 2013.
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