According to the US Governmental Accountability Office, more than $5 billion of your hard earned dollars were mistakenly paid out to tax identity thieves in 2013. An IRS-estimated $24.2 billion (based on what it could detect) of fraudulent refunds were prevented from being mistakenly paid out.
Identity Theft takes advantage of the IRS's "look-back" compliance model, which issues refunds after conducting self-reviews rather than holding refunds until completing all compliance checks. For this reason, a suggested solution is earlier matching of employer reported wage information to the taxpayer's returns before issuing refunds. The US Governmental Accountability Office found that the IRS cannot do such matching because an employer's wage data is not available until months after the IRS issue most refunds (see chart below which highlights that a significant amount of refunds are issued even prior to the IRS receives the W-2's to match to the information filed by the taxpayer). As a matter of fact, the IRS begins matching employer reported W-2 data to tax returns in July of the following tax season.
In 2014, the Department of Treasury proposed accelerating W-2 deadlines to January 31, but without fully assessing the impact of this proposal, Congress does not have the information needed to deliberate the merits of such a significant change. Treasury has requested permission to reduce the 250-return threshold for e-filing W-2s to those filing between 5 to 10 W-2s which would save the Social Security Administration roughly $.50 per W-2 filed and allow for further prevention of mistakenly issued refunds.
You're Invited! Annual Not-For-Profit Accounting Update
Thursday, September 26, 2019
Hosted at Detroit Historical Museum
Save The Date!
Middle Market Manufacturing Outlook
Wednesday, October 23
Hosted at the Detriot Athletic Club
7:30 AM - 11:30 AM