The IRS is trying to curb tax fraud, but unscrupulous IRS employees can tarnish the organization’s image by stealing taxpayer money.
IRS employee Patricia Fountain, 35, was found guilty of tax fraud and sentenced to more than 12 years in prison. Fountain worked as a customer service representative for a decade, where she learned many IRS inside secrets, such as the IRS does not verify telephone tax credit requests from filers who claim to owe less than $1,500, and for the $8,000 first-time homebuyer credit, the IRS requires no proof from filers.
Fountain, along with her boyfriend and another conspirator, filed false claims for tax credits to collect thousands of dollars in tax refunds. She used her knowledge of how the IRS works to steal revenue money from the IRS for five years.
Tax fraud carried out through identity theft is one of the most difficult challenges before the IRS today. This leads to a loss of billions of dollars worth of revenue money every year. Even though the IRS stopped $20 billion dollars in false refunds in 2012, more than 400,000 taxpayers were reported to be victims of tax fraud that same year by the Federal Trade Commission (FTC).
Most taxpayers discover that their security was compromised and false tax returns were filed in their name when they file their tax return and get rejected by the IRS. Having the problem solved is also a frustrating process that can stretch for weeks or months. To minimize the chances of falling victim to tax fraud, taxpayers are encouraged to file their taxes as early as possible.
The IRS uses various measures to curb tax fraud. It has tightened up its screening of tax returns, and is using both technology and manpower to stop tax theft, but tax fraud, especially that of false tax returns, remains prevalent.