Tax fraud will slow IRS refunds this year

  • The Washington Post
  • Thursday, January 7, 2016 3:29pm
  • Business

WASHINGTON — In less than two weeks, taxpayers will be able to file their tax returns. But many taxpayers will have to wait longer to cash out their tax refunds thanks to new efforts from the IRS and state tax authorities to catch tax fraud.

Illinois became the first state to announce this week that it will delay tax refunds to have more time to verify tax returns. State tax refunds won’t be issued until after March 1, the state’s department of revenue announced Monday.

The move comes at a time when tax-related identity theft is a growing problem for tax groups, including the IRS and state tax authorities. An apparent spike in suspicious returns during the last filing season led to a series of new efforts from the IRS, state tax authorities and the tax preparation industry to cut down on refund theft during the upcoming filing season, which starts Jan. 19.

“By delaying tax refunds by just a few weeks, we’ll be able to better detect attempts at identity theft and ensure taxpayer refunds do not fall needlessly into the hands of criminals,” said Connie Beard, the director of the Illinois Department of Revenue. Separate fraud prevention steps taken by the department during the last filing season saved the state from paying about $5 million in fraudulent refunds, Beard said.

This year, state tax agencies are partnering with the IRS and tax preparation companies to share information about suspicious tax returns in an effort to catch tax fraud as it happens. Many states have been revising their fraud filters to identify the phony returns being filed by criminals to steal fraudulent tax refunds.

For example, Alabama is asking taxpayers to fill out questionnaires meant to help verify their identities, before tax refunds are paid out. The state is also asking employers to send W2 forms earlier, by the end of January, so that it can have the data available to help verify tax returns as they come in, said Julie Magee, commissioner of revenue for Alabama. All suspicious returns, such as those with employment information that doesn’t match their records, will be held until they can confirm a person’s identity, Magee said in an interview last fall. “Or we won’t pay them at all,” she said.

Some taxpayers also faced delays with their federal tax refunds last year because of added fraud prevention efforts, National Taxpayer Advocate Nina Olson said in her annual report to Congress, released this week. More than 40 percent of the 4.8 million tax returns flagged by the IRS’s fraud filters during the last filing season were filed by legitimate taxpayers, up from 20 percent the year before, Olson said. But those delays may affect a small percentage of taxpayers.

The IRS said in late December that it still expects to pay out roughly 90 percent of tax refunds within their typical time frame of three weeks or less during the next filing season. The agency said filing electronically and using direct deposit can help people receive funds more quickly.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Black Press Media operates Sound Publishing, the largest community news organization in Washington State with dailies and community news outlets in Alaska.
Black Press Media concludes transition of ownership

Black Press Media, which operates Sound Publishing, completed its sale Monday (March 25), following the formerly announced corporate restructuring.

Maygen Hetherington, executive director of the Historic Downtown Snohomish Association, laughs during an interview in her office on Thursday, Feb. 15, 2024, in Snohomish, Washington. (Ryan Berry / The Herald)
Maygen Hetherington: tireless advocate for the city of Snohomish

Historic Downtown Snohomish Association receives the Opportunity Lives Here award from Economic Alliance.

FILE - Washington Secretary of State Steve Hobbs poses in front of photos of the 15 people who previously held the office on Nov. 22, 2021, after he was sworn in at the Capitol in Olympia, Wash. Hobbs faces several challengers as he runs for election to the office he was appointed to last fall. (AP Photo/Ted S. Warren, File)
Secretary of State Steve Hobbs: ‘I wanted to serve my country’

Hobbs, a former Lake Stevens senator, is the recipient of the Henry M. Jackson Award from Economic Alliance Snohomish County.

Mark Duffy poses for a photo in his office at the Mountain Pacific Bank headquarters on Wednesday, Feb. 14, 2024 in Everett, Washington. (Annie Barker / The Herald)
Mark Duffy: Building a hometown bank; giving kids an opportunity

Mountain Pacific Bank’s founder is the recipient of the Fluke Award from Economic Alliance Snohomish County.

Barb Tolbert poses for a photo at Silver Scoop Ice Cream on Thursday, Feb. 29, 2024 in Arlington, Washington. (Annie Barker / The Herald)
Barb Tolbert: Former mayor piloted Arlington out of economic brink

Tolbert won the Elson S. Floyd Award, honoring a leader who has “created lasting opportunities” for the underserved.

Photo provided by 
Economic Alliance
Economic Alliance presented one of the Washington Rising Stem Awards to Katie Larios, a senior at Mountlake Terrace High School.
Mountlake Terrace High School senior wins state STEM award

Katie Larios was honored at an Economic Alliance gathering: “A champion for other young women of color in STEM.”

The Westwood Rainier is one of the seven ships in the Westwood line. The ships serve ports in the Pacific Northwest and Northeast Asia. (Photo provided by Swire Shipping)
Westwood Shipping Lines, an Everett mainstay, has new name

The four green-hulled Westwood vessels will keep their names, but the ships will display the Swire Shipping flag.

A Keyport ship docked at Lake Union in Seattle in June 2018. The ship spends most of the year in Alaska harvesting Golden King crab in the Bering Sea. During the summer it ties up for maintenance and repairs at Lake Union. (Keyport LLC)
In crabbers’ turbulent moment, Edmonds seafood processor ‘saved our season’

When a processing plant in Alaska closed, Edmonds-based business Keyport stepped up to solve a “no-win situation.”

Angela Harris, Executive Director of the Port of Edmonds, stands at the port’s marina on Wednesday, Jan. 24, 2024, in Edmonds, Washington. (Ryan Berry / The Herald)
Leadership, love for the Port of Edmonds got exec the job

Shoring up an aging seawall is the first order of business for Angela Harris, the first woman to lead the Edmonds port.

The Cascade Warbirds fly over Naval Station Everett. (Sue Misao / The Herald file)
Bothell High School senior awarded $2,500 to keep on flying

Cascade Warbirds scholarship helps students 16-21 continue flight training and earn a private pilot’s certificate.

Rachel Gardner, the owner of Musicology Co., a new music boutique record store on Thursday, Jan. 18, 2024 in Edmonds, Washington. Musicology Co. will open in February, selling used and new vinyl, CDs and other music-related merchandise. (Olivia Vanni / The Herald)
New Edmonds record shop intends to be a ‘destination for every musician’

Rachel Gardner opened Musicology Co. this month, filling a record store gap in Edmonds.

MyMyToyStore.com owner Tom Harrison at his brick and mortar storefront on Tuesday, Sept. 6, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Burst pipe permanently closes downtown Everett toy store

After a pipe flooded the store, MyMyToystore in downtown Everett closed. Owner Tom Harrison is already on to his next venture.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.