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To Fight $5.2B In Identity Theft, IRS May Need To Change the Way You File Taxes

Posted by Soulskill on from the your-tax-dollars-at-work dept.

coondoggie writes: Based on preliminary analysis, the Internal Revenue Service (IRS) estimates it paid $5.2 billion in fraudulent identity theft refunds in filing season 2013 while preventing an additional $24.2 billion (based on what it could detect). As a result, the IRS needs to implement changes (PDF) in a system that apparently can't begin verifying refund information until July, months after the tax deadline. Such changes could impact legitimate taxpayers by delaying refunds, extending tax season and likely adding costs to the IRS.

1 of 410 comments (clear)

  1. Thanks for the fraud, Turbotax by nbauman · · Score: 5, Informative

    We wouldn't have this problem if we filed our taxes online. Turbotax has prevented that, because they want to charge us for doing what the government could do free, as it does in less corrupt countries.

    We've discussed this on Slashdot before. It's like keeping marijuana illegal because the prison guards' unions want to keep their jobs.

    http://www.slate.com/blogs/mon...
    The Sleazy PR Campaign to Prevent the IRS From Making Your Taxes Simpler
    By Jordan Weissmann
    Slate
    April 14 2014 3:41 PM

    Theoretically, it should be far easier for Americans with simple finances to file their tax returns. Instead of making tax filers putz around W-2s and tax prep software, the IRS could electronically prepopulate their paperwork with the information it already receives from banks and employers, and tell filers how much they owe. If the final figure looked about right, you’d have the option to file. As Matt Yglesias wrote here last year, the whole process could be a five-minute snap.

    Theoretically. But for years now, Intuit, the maker of TurboTax, has fought tooth and nail to prevent automatic tax filing from becoming a reality, lobbying against bipartisan legislation to introduce it with the help of a powerful tech industry trade group and conservative anti-taxers like Grover Norquist. Intuit and its competitors in online tax prep don’t want the government cutting its market share. The tax-crusaders want to ensure that paying the government remains as much of a painful, resentment-generating slog as ever. And thus a potent alliance has been born.

    http://www.propublica.org/arti...
    How the Maker of TurboTax Fought Free, Simple Tax Filing
    by Liz Day
    ProPublica, March 26, 2013, 5 a.m.

    So why hasn't it become a reality?

    Well, for one thing, it doesn't help that it's been opposed for years by the company behind the most popular consumer tax software — Intuit, maker of TurboTax. Conservative tax activist Grover Norquist and an influential computer industry group also have fought return-free filing.

    Intuit has spent about $11.5 million on federal lobbying in the past five years — more than Apple or Amazon. Although the lobbying spans a range of issues, Intuit's disclosures pointedly note that the company "opposes IRS government tax preparation."

    The disclosures show that Intuit as recently as 2011 lobbied on two bills, both of which died, that would have allowed many taxpayers to file pre-filled returns for free. The company also lobbied on bills in 2007 and 2011 that would have barred the Treasury Department, which includes the IRS, from initiating return-free filing.

    Intuit argues that allowing the IRS to act as a tax preparer could result in taxpayers paying more money. It is also a member of the Computer & Communications Industry Association (CCIA), which sponsors a "STOP IRS TAKEOVER" campaign and a website calling return-free filing a "massive expansion of the U.S. government through a big government program."