The tax filing season starts Jan. 23. But a new law requires the IRS to delay tax refunds for people claiming these credits until Feb. 15. Processing times will delay most of the refunds until the end of February, Koskinen said.
The delay is designed to give the agency more time to screen the returns for fraud. The IRS estimates that it issued $3.1 billion in fraudulent tax refunds to identity thieves in 2014. The year before, the agency says, it paid out $5.8 billion in fraudulent refunds. Over those two years, the IRS says it blocked nearly $47 billion in fraudulent refunds. The earned income tax credit is one of the federal government's largest anti-poverty programs. It has also been plagued by billions in improper payments each year, including overpayments, underpayments and fraud. The delayed refunds are part of a broader effort by the IRS to fight identity theft and fraud on refunds, which has mushroomed into a multibillion industry. Two years ago, the IRS started partnering with the major tax-preparation services and with state tax agencies to combat identity theft.
"All of the players in the industry are sharing information against the common enemy, which is organized crime," Cobb said. Koskinen said the agency is making progress. Last year, the number of people reporting to the IRS that their identities were stolen dropped by 50 percent, to 275,000 taxpayers, Kosinen said.
However, a new report by an agency watchdog says stepped up screening by the IRS is also delaying legitimate refunds, forcing taxpayers to spend weeks or months proving their identity to the tax agency. Last year, about 1.2 million legitimate refunds — worth $9 billion — were delayed an average of more than 30 days, according to a report released Tuesday by Nina E. Olson, the National Taxpayer Advocate. Olson runs an independent office within the IRS.
Koskinen said the IRS has had to get more aggressive in screening tax returns because the crooks have become increasingly sophisticated. "We're talking about international organized crime syndicates," Koskinen said.
"All of the players in the industry are sharing information against the common enemy, which is organized crime," Cobb said. Koskinen said the agency is making progress. Last year, the number of people reporting to the IRS that their identities were stolen dropped by 50 percent, to 275,000 taxpayers, Kosinen said.
However, a new report by an agency watchdog says stepped up screening by the IRS is also delaying legitimate refunds, forcing taxpayers to spend weeks or months proving their identity to the tax agency. Last year, about 1.2 million legitimate refunds — worth $9 billion — were delayed an average of more than 30 days, according to a report released Tuesday by Nina E. Olson, the National Taxpayer Advocate. Olson runs an independent office within the IRS.
Koskinen said the IRS has had to get more aggressive in screening tax returns because the crooks have become increasingly sophisticated. "We're talking about international organized crime syndicates," Koskinen said.
So does this affect you? How do you feel about having your refund delayed?
