While IRS Fraud is not that prevalent there are lots of people in breach simply due to a lack of understanding of their obligations. When it comes to true fraud, there are special departments looking into the various people and the potential problems of evading payment and other issues regarding Internal Revenue Service fraud.
Statistics For Fraud Cases In 2011
When it comes to general fraud, there were 1834 investigations in 2011; 1214 people were prosecuted, 1114 people were indicted and 864 people were sentenced. The average prison time for these people was 29 months. When IRS fraud happens, it is taken very seriously, so it is best to stay on the right side of the law. Of course, with identity theft, things have gotten a little murkier.
Types of IRS Fraud
There are so many different types of fraud; it makes it complicated to put real numbers on it without breaking it down. There are abusive return preparers, which you need to be aware of. The IRS site puts out a list yearly. Employment tax evasion is committed by companies that do not pay all the employment taxes on their employees. Often employees are completely unaware until the time comes for them to claim unemployment or file for social security.
Other corporate problems include financial institution fraud, corporate fraud, insurance fraud, healthcare fraud, mortgage and real estate fraud and questionable refund programs. Bankruptcy and mortgage frauds can also be perpetrated by individuals and can extend to healthcare and insurance fraud as well. All of these relate to the IRS because there are taxes on all these items that are also being avoided when fraud is part of the picture.
Identity Theft, an On-Going Issue
Identity theft has come to the forefront of most people’s minds in recent years because it is so easy to accomplish. The stealing of bank accounts, personal information and other key components mean that people can set up accounts, cards and even jobs in your name without you knowing about it. This extends to IRS fraud in the sense that you can be pinned for monies you never earned and proving it wasn’t you takes much longer than it did to ever steal your identity. While many redundancies have been put in place, smart hackers are still getting through the systems and wreaking havoc on the banking system.
Identity Theft Costs Everyone
Not only does identity theft cost companies’ time and effort in securing the IT departments, it also costs money to each individual. While the companies might be putting the programs into place, they are funding it from fees and costs that are passed down to the consumer. Whether you have been a victim or not, you are definitely paying for the losses when it comes to such problems. While companies often refund charges that don’t belong to you, if the funds aren’t recovered, it comes down to insurance companies and other payouts. In the end, it all gets divided amongst the consumer to pay for this. While you might get your $100 back, daily you are paying an extra dollar or two to cover the next time it might happen.
Identity Theft and Tax Returns
A newer more interesting trend is the idea that people are filing tax returns under stolen identities. While this might seem ludicrous, it often keeps the identity problem a secret for longer. As long as you are all good with the IRS, you are less likely to be found out. By filing these returns, the real owner of the social security number is none the wiser to what is going on. While the IRS is trying to put into place a flagging system that stops multiple returns from being processed, the sheer volume of their work often makes it difficult, especially for smaller accounts.
IRS fraud and identity theft cost the country millions every year. It is hard to put a number on it because so many of the costs are absorbed in other areas. As the technological age advances, it is a reasonable question to wonder if it really is saving us time and money or merely costing us more to cover the costs of the new high tech bandit. As a citizen, you need to voice your concerns with your local congressmen and let them know that measures need to be taken now- before it is too late.