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Posted by: Maricopa Lawyers on Aug 8, 2014

A recent report from the Arizona Department of Revenue indicates that tax-refund fraud is on the rise. The agency has officially halted $74 million in refunds most recently, an amount doubling the previous fiscal year.

The department acknowledges the issue of fraud is spiraling with more people issuing false returns with the use of stolen or fictitious taxpayer credentials. Records show that $32 million were halted the previous year, painting a worrisome picture for the government agency.

Anthony Forschino, assistant director heading criminal investigations, addressed the media concerning the spike in fraudulent returns. He reported that $2 million in refunds were halted only five years before, adding further scope to the issue.

The issue extends well beyond the state, also laying a heavy burden upon the Internal Revenues Service and additional taxing agencies at the federal level. The IRS reported earlier this year that they froze 14.6 million suspicious returns that sought $50 billion in false claims over a period spanning from 2011 to 2013.

There are more than 3,000 IRS employees dedicated to preventing tax-refund fraud. Despite this concentrated effort, there are still immense flaws in the current system’s design. The Treasury Department reports the Internal Revenues Services pays out at least $5 billion in fraudulent filings each year.

Tax fraud creates huge problems on a national scale, much like a domino effect. Fraudulent returns contribute to government fiscal pressures while opening the door to new tax-filing complexities. Delayed refunds are one effect that directly impacts taxpayers.

The IRS plans to ramp up enforcement. Computer-based scrutiny on returns is helping investigators more readily identify fraud; criminal investigations rose from 66 cases in the previous year to 1,492 in fiscal 2013. The advent of new crime fighting technology could hold the key to curbing Arizona’s rising trend in tax-return fraud.