Could the IRS do more to stop a $4 billion tax fraud problem?

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by Russel Kinsaul / News 4

KMOV.com

Posted on March 28, 2014 at 5:51 PM

Updated Saturday, Mar 29 at 5:02 AM

(KMOV) -- Each week during tax season the number of identity theft tax fraud cases in the St. Louis area have jumped.

Chesterfield Police reported 9 new cases last week, Arnold Police have had 15 so far and Police investigated 4 new cases last week in Kirkwood and Oakland. Justin Gelfand is a former federal prosecutor at the U.S. Justice Department where he prosecuted identity theft tax fraud. He called this, “a criminal epidemic.”

Identity theft tax fraud happens when a criminal gets someone’s social security number and files a tax return using their information to get a tax refund that sometimes can be as high as $6,000.

The victim doesn’t realize till they file their taxes and the IRS rejects their return because records show they’re return was already filed. The victim will eventually get their refund but it can take up to 120 days and a frustrating process of proving their identity.

The IRS has stepped up efforts to fight the problem and says investigations jumped 66% last year and thanks to new filtering software were able to identify fraudulent tax returns that would have paid out billions in refunds. But Gelfand says, “The filters do work but the IRS can do significantly more to prevent fraudulent tax refunds from being issued.”

Gelfand believes the IRS software filters should also be able to red-flag when multiple returns are filed from the same IP address and when multiple refunds are sent to the same prepaid debit cards.

Gelfand also suggests the IRS wait to issue refund checks until more time is taken to scrutinize refunds but admits taxpayers would have to wait months instead of weeks to get their refund.

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