Egg on the face of the IRS

Oh well, at least they’ve admitted it.

More than 300,000 taxpayer accounts got hacked at the IRS last year, too.

Oh well, they’re down from 0.1% to 0.03%. In the noise, really…

Anyone have another link? The article is so incoherently written it’s not clear what exactly happened? They were able to associate a random SSN with the PIN used to file that person’s return? The PIN is mostly arbitrary, I’d be more concerned with the opposite direction.

It was poorly written explained by the IRS in their press release.

It sounds like they’re talking about income tax fraud. Someone uses your SSN number to file a fake income tax return, making up numbers that result in a big refund. Of course, the refund goes into their account, not yours. And then when you file your legitimate return, things get hairy, because “you” already got your refund.

I wonder how someone could do this. About 10 years ago my now ex and I had our tax return held because one of my ex’s employers had not submitted W-2’s to the IRS. It took a couple warnings from the IRS before he finally submitted the forms and it still took a month before our tax return was in our bank account. Do they file fake W-2’s too?

What you describe sounds like a return held up for review, and it wouldn’t have been done just because the W-2 was not yet submitted. It’s still the case that about 1% of returns get delayed by 3-9 weeks while the IRS verifies information. (That’s 1% in my practice; not sure of the national number). Here’s the longer version of what’s going on:

10 years ago was the legacy e-filing system. The IRS has modernized it, now called MEF (modernized e-filing).

Part of that modernization mandate (from upper levels of the government, so the IRS not the only entity at fault here) was to speed up return and refund processing.

Regarding W-2 forms: they are not submitted to the IRS directly. Employers file W-2 and W-3 with the Social Security Administration, with the forms due 2/28 (by mail) or 3/31 (electronically), and then SSA shares the data with the IRS. That means that even a timely filed W-2 might not be in the IRS’s systems until May. The IRS will tell you the same if you call them for a copy.

So the system was built with a stated intention of providing rapid refunds based on the honesty of the filers and only using IRS information later to catch and penalize people who made mistakes.

Any improvements in this system have to happen at a much more fundamental level. Either change the refund system so that nobody gets a dime until June*, or make a major overhaul of employer reporting requirements so that the IRS can get their information more quickly.

Not sure why the IRS should have egg on its face for catching attempted fraud before it was completed.

Because it shouldn’t have happened in the first place, and they did get away with a lot of it.