IRS Reports Over 1,000,000 Cases of Possible Fraud

IRS Reports Over 1,000,000 Cases of Possible Fraud

( – On May 10, the Treasury Inspector General for Tax Administration (TIGTA) filed its interim report for the 2023 tax filing season. The office reported that the IRS received 54.9 million returns as of the beginning of March, most of which were filed electronically. The agency distributed $127.3 billion in refunds. The TIGTA also included information about the tax agency’s fraud detection process, identifying many possibly fraudulent returns.

As of March 2, the IRS stated it found almost 1.1 million tax returns expecting about $6.3 billion in refunds that require additional review. The report noted the tax agency incorporated 236 filters, as opposed to the 168 used in 2022, to weed out any potential identity theft tax returns. Once identified, the IRS must verify the taxpayer’s identity before issuing a refund. Within that same timeframe, the agency had already found 12,617 fraudulent returns and stopped $105.3 million from going out to thieves.

The TIGTA report showed that the IRS found 9,626 identity theft tax returns the previous year using fewer filters. The filter system used takes into account several factors, including income, withholding, filing requirements, taxpayer age, filing history, and prisoner status, as some of the parameters to flag potential problems. However, identity theft isn’t the only fraudulent issue the IRS addresses. The agency also tries to stop fake returns before they even enter the system. If a suspicious return is identified, the IRS locks the account, rejects the e-filed and paper returns, and prevents any refunds from leaving the tax agency. During the 2022 filing year, the IRS stopped the issuance of over $807 million in fraudulent refunds. As of February 25, the agency has stopped over $303 million in refunds from going out to bad actors.

The interim report also showed the IRS has significantly reduced its backlog accumulated over the pandemic — it cut down more than 6 million returns — but still has a ways to go.

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