Tax refunds

Longtime readers of Albany Catholic know that one of our proposals for fiscal responsibility is to collect the taxes that are owed to the government, a plan that we believe could alleviate the need for higher taxes or, at the very least, provide funding for programs we support. This week we read an article by Kevin McCoy of USA TODAY with the headline: How the IRS failed to stop $200M in bogus refunds.

At least two months before the IRS mistakenly began paying an estimated $200 million in fraudulent or erroneous 2006 tax season refunds, the agency was warned about potentially “catastrophic” problems in a new computer being developed to avert such a blunder.

A USA TODAY examination of the IRS Electronic Fraud Detection System project found the previously unpublicized November 2005 warning, along with other warnings and new details of missteps that culminated in one of the most costly and embarrassing episodes in the tax agency's recent history.

As the peak of the 2006 tax season approached last spring, the IRS discovered that a planned upgrade of the agency computer that red-flags potentially fraudulent tax refunds had failed. The discovery came after the IRS had shut down the older computer. The failure forced the agency to continue processing 2006 tax season returns — and issuing refunds — without its first line of electronic defense against fraud.

USA TODAY's review found that the IRS lacks a comprehensive plan to recover the $200 million, which the agency said represents far less than 1% of all 2006 tax season refunds. That means most fraudulent filers who got federal checks in 2006 will likely never be caught.

You can read more here. Albany Catholic recommends you contact your congressional representatives (see button at right to locate them) and ask what they intend to do to address this issue.