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Hike In ID Fraud Causes Delays In US Tax Refunds Stimulus Checks

Hike In ID Fraud Causes Delays In US Tax Refunds, Stimulus Checks

June 14, 2021 at 04:06AM
by PYMNTS

Identity thieves are inflicting pain not only on victims, but on taxpayers whose refunds have been delayed by IRS security protocols the criminals have made necessary, data contained in the agency’s Taxpayer Advocate’s recent annual report to Congress indicates.

Most taxpayers get refunds, the report states, and refunds have been delayed — sometimes significantly — due to alerts issued by computerized “fraud filters” the agency deploys, the report states.

“Each year, all returns claiming refunds are passed through filters designed to detect fraudulent wage or identity theft-based claims,” the report states. “For many years, the filters have generated high false positive rates, leading to refund delays for those returns flagged. The problem was compounded in 2020 because the IRS notifies taxpayers of refund holds by written correspondence, and the IRS was delayed both in sending notices and in processing taxpayer responses.”

According to the Taxpayer Advocate, the filters flagged 5.2 million returns seeking refunds in 2020.

“For about 25 percent of the returns flagged for income verification, refunds took longer than 56 days,” the report states. “For about 18 percent of the returns flagged for identity verification, refunds took longer than 120 days.”

CNBC on June 12 told the story of Jeff Lavigne, a suburban-Dallas man with severe back problems who has been waiting for his refund so he can use the money to line up medical coverage and ultimately the care he needs.

The roughly $2,700 refund had been suspended since March because Lavigne had been unable to get through on phone lines, or with online tools, in order to prove his identity, CNBC reported.

“I started making plans in my head, in terms of getting the help I need,” CNBC quoted Lavigne as having said. “I’m trying to take one step at a time, and this is step one.”

Last week, according to CNBC, Lavigne finally got through to an IRS staffer and was able to satisfy her as to his identity. Now he may have to wait another nine weeks for a refund.