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IRS fails to detect fraud, inspector general says

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in Small Business Tax,Small Business Tax Deduction Strategies

The Treasury Inspec­­tor General for Tax Administration (TIGTA) has accused IRS supervisors of shirking their duties. (TIGTA-2012-37, 8/8/12) In a new report, TIGTA says that agents were encouraged to rubber-stamp applications for Individual Taxpayer Identification Numbers (ITINs) submitted by illegal immigrants.

As a result, the immigrants were able to create false identities that were subsequently used to obtain fraudulent federal income tax refunds. As a prime example, 15,795 ITINs were assigned to a single location in Phoenix.

Even worse, 23,994 tax refunds totaling $46.3 million were issued to one Atlanta address. Responding quickly, the IRS has acknowledged the error of its ways and is already implementing steps to improve procedures.

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