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IRS stopping more tax fraud attempts

Earlier this week, I posted an admittedly flippant question on Twitter about the continual Treasury Inspector General for Tax Administration (TIGTA) investigations of the Internal Revenue Service:

Tax geek ponderings TIGTA IRS good job_Follow me on Twitter!

The consensus on that social media site was "no."

Then, as if on cue, the very next day I got an email announcement from TIGTA about one of its reports that found the IRS is doing a much better job in catching fraudulent tax returns.

According to TIGTA Report Number 2011-40-128, the number of fraudulent tax refund claims that the IRS detected and stopped during the 2011 tax-filing season showed a 171 percent increased over the previous year.

IRS success at catching fraudulent returns TIGTA 2011Click the image (or here) for a larger view.

As for Uncle Sam's bottom line, the fake tax refunds that the IRS didn't send out came to $4.4 billion.

Way to go IRS!

On the other hand…: Of course, the good IRS work on catching more instances of attempted tax fraud was part of a larger TIGTA look into "The Passage of Late Legislation and Incorrect Computer Programming Delayed Refunds for Some Taxpayers During the 2011 Filing Season."

Yeah, I agree. all of TIGTA's good work keeping the IRS on the ball often gets undermined by the oversight office's thorough, but usually tedious, report titles. But I digress. Back to TIGTA's evaluation of the IRS' performance during the most recent tax filing season.

In 2011, the IRS received 130.7 million individual income tax returns and issued approximately 98.2 million refunds totaling $277.1 billion. No small feat.

"Overall, the IRS' performance during the 2011 filing season has been successful," said TIGTA Inspector General J. Russell George in a statement.

But in other parts of its investigation, TIGTA found the IRS didn't fare as well this year in implementing some tax laws.

"The IRS continues to face challenges relating to First-Time Homebuyer Credit repayments, verification of the Adoption Credit, and several energy-efficiency tax credits," said George.

Costly processing errors: The IRS missed 140,596 taxpayers who erroneously claimed $140.2 million related to various tax credits.

With the troublesome homebuyer tax credit alone, TIGTA found that 26,649 taxpayers had their claim of this credit inaccurately processed.

Dollar-wise, $5.8 million in homebuyer repayment amounts was not assessed and $675,063 in repayment amounts was erroneously assessed.

Sharing the blame: Not to let the IRS off the hook, but some of the blame, particularly for homebuyer credit errors, also has to be shared by Congress.

The folks on Capitol Hill make, and revise way too often, the tax laws with which we and the IRS must deal.

That said, administering our complicated tax code is not an easy job, but it's one that IRS employees and executives know must be done accurately.

Good for the IRS for doing its job pretty well in 2011.

Now the agency needs to make sure that one day, and one day soon, TIGTA can give it a totally positive review.

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