IRS to Revamp Fraud Detection System for New Identity Theft Techniques

The Internal Revenue Service needs to do more work to refine its latest fraud detection system to catch the new schemes that its older system managed to detect, according to a government report.

The report, from the Treasury Inspector General for Tax Administration, found that a pilot program of the IRS’s replacement fraud detection system successfully identified tax returns involving identity theft that other IRS fraud detection systems did not identify. However, the other existing fraud detection systems identified tax returns involving identity theft that the replacement system did not select.

For example, the other IRS fraud detection systems identified 54,175 confirmed identity theft tax returns with refunds totaling more than $313 million not identified by the replacement system. Read More