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Watchdog: Growing IRS workload causing problems
Question of the Day
The report said the number of returns seeking refunds that the agency computer program set aside for screening for possible fraud grew by 72 percent, to 1.1 million, from 2010 to 2011.
The report said the number of bogus refund claims is growing as people submit multiple false returns via electronic filing. The growth of refundable tax credits for purchases of first homes, college costs and other expenses is also contributing to the rising number of bogus claims. Refundable credits can produce cash payments to people who owe no taxes, making them enticing targets for fraud.
Olson’s report said the IRS handled more than 226,000 cases claiming identity fraud in 2011, a 20 percent increase over 2010. Thieves often request refunds by using the Social Security number of a person they falsely claim as a relative, frequently early in the filing season before the actual taxpayer files his or her return.
Though the overall rate of fraud remains relatively low, Olson said in an interview, “you want to make sure you’re not abusing the taxpayers by letting dollars go out the door.” Otherwise, she said, “taxpayers are going to get disgusted” and lose faith in the tax system.
In one measure of errors the agency is making, Olson’s bureau received 21,000 complaints from taxpayers last year after the IRS blocked requested refunds because it suspected fraud. Three in four of them eventually qualified for the money. Those refunds averaged $5,600 and it typically took six months for taxpayers to receive them.
In addition, the IRS corrected 10.6 million discrepancies in taxpayers’ returns in 2010 that it considered mathematical errors, more than double the 4 million corrected discrepancies in 2005, the report said. But the IRS itself made some errors. On 300,000 returns on which it disallowed exemptions for dependent children, it later had to restore the exemption just over half the time.
The report said that at the end of last year, it took the agency more than six weeks to answer nearly half of taxpayers’ letters and faxes dealing with adjustments to their returns. The agency does not accept emails from taxpayers, Olson said. The report also said that between 2004 and last year, the portion of phone calls from taxpayers the IRS answered fell from 87 percent to 70 percent.
“Few government agencies or businesses would be satisfied if their customer service departments were unable to answer three out of every 10 calls,” the report said.
Further complicating the IRS‘ task are constant changes to the 3.8 million-word tax code. Over the previous decade, 4,428 changes have been made to it, including an estimated 579 changes in 2010.
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