While the Internal Revenue Service is getting better at identifying fraud, it still paid more than $2.1 billion in potentially fraudulent refunds in 2012, the Treasury Inspector General for Tax Administration (TIGTA) said in a new report.
"TIGTA's analysis of Tax Year 2012 tax returns identified 787,343 undetected potentially fraudulent tax returns with tax refunds totaling more than $2.1 billion that have the same characteristics as IRS-confirmed identity theft tax returns," the report says.
The IRS continued to send hundreds of refunds to duplicate addresses and bank accounts. Of the top 10 addresses that were sent multiple fraudulent returns, three were in Bulgaria, three were in Florida, one was in Ireland and one was in Lithuania, according to The Wall Street Journal. In one particular instance, the IRS paid nearly $800,000 for 133 returns all giving the exact same bank account number.
More than 12,000 returns were filed on behalf of deceased people, receiving $22.2 million in refunds. Almost 2,000 returns worth $1.5 million were sent to children under the age of 14, the report found.
Over 158,000 Social Security numbers were also used on multiple tax returns, with an estimated $162 million paid to the fraudsters who filed returns before the legitimate taxpayer.
Despite the $2.1 billion sent to likely fraudulent filers, that number decreased by nearly $3.1 billion since 2010.
The IRS disputed some of the inspector general's methodology, saying that it believes more than half of the 787,343 returns identified in the report should not be considered fraudulent.
"Much more work remains, but it's important to note that our actions have led to an increasing number of fraudulent returns being detected and stopped - despite challenging budgets in recent years," the IRS said in a statement, WSJ reported.
The report comes just days after the IRS revealed its website had been targeted by cyberthieves who were able to obtain tax return data for more than 100,000 U.S. households and receive tens of millions of dollars in fraudulent refund claims filed with the stolen information.
On Friday, the chairman of the House Oversight Committee subpoenaed the IRS's director of privacy, governmental liaison and disclosure, Mary Howard, to testify at hearings scheduled Wednesday on the theft, The Associated Press reported.
