In February, the popular tax filing software, Turbo Tax found increased fraudulent activity in filing state returns and briefly stopped submitting returns. Taxpayers who were affected by the fraudulent activity were unable to file their state tax returns. More than 19 states were affected by the fraudulent tax filing scheme.
How could a hacker file a fraudulent tax return and get a refund? It is easy. Information such as names, addresses, birthdays and Social Security Numbers are readily available on the Internet black market for less than $3 a record. Thieves can ask for refunds to be sent to PO Boxes or a temporary debit card that can be burned after meeting the purpose. These types of fraud cost IRS $5.2 billion in 2013, according to Bloomberg Businessweek.
Congress has been in crosshairs with the IRS lately. They have been cutting its budget for some time now and the IRS lost more than $1 billion due to budget cuts since 2010. The Congress will not be jumping to help IRS at this time. The IRS sees huge uptick in fraudulent activity and budget mess is limiting its ability to efficiently and effectively manage the huge bureaucracy as well as fraudulent activities.