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Sunday, November 18, 2012

TIGTA: Tax Preparers and IRS Agents May be Stealing Taxpayer Direct Deposit Refunds

TIGTA The Treasury Inspector General for Tax Administration has released Processes for the Direct Deposit of Tax Refunds Need Improvement to Increase Accuracy and Minimize Fraud (2012-40-118):

In 2011, more than 842,000 taxpayers took advantage of this “split refund” option, which the IRS first offered in 2007. They may split their tax refunds between two to three different checking or savings accounts using Form 8888, Allocation of Refund (Including Savings Bond Purchases).

However, TIGTA found that more than 65,300 bank accounts had multiple direct deposits, accounting for more than 949,000 refunds for approximately $1.6 billion. Auditors found that current IRS processes to ensure the accuracy of direct deposit information are not sufficient, which increases fraud potential.

Additionally, the option to split a refund between multiple accounts increases the risk of fraud. ... TIGTA identified more than 4,400 bank accounts listed on tax return preparers’ personal tax returns that had multiple direct deposits. More than 202,000 refunds for more than $309 million were sent to these bank accounts. This raises a concern as to whether tax return preparers are diverting clients’ refunds or portions of refunds to their own bank accounts to pay tax preparation fees or for other reasons.

TIGTA also identified more than 200 bank accounts listed on IRS employees’ tax returns that had multiple direct deposits. More than 10,600 refunds for more than $14 million were sent to these bank accounts.

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Comments

"TIGTA also identified more than 200 bank accounts listed on IRS employees’ tax returns that had multiple direct deposits. More than 10,600 refunds for more than $14 million were sent to these bank accounts."

What????

Am I reading this right? Over 200 bank accounts recived over 10,000 refunds?

When is the perp walk? I'll be there with tar and feathers.

Posted by: patch | Nov 19, 2012 1:50:00 PM

And where are the internal controls? No bank account should be able to be used more than once.

Posted by: patch | Nov 19, 2012 1:52:02 PM

that's one way to get a raise
How about the thousands that went to one address

Now lets talk 1099's
get the banks to turn over deposit totals by SSN EIN TIN numbers and then computer compare to filed tax returns
differences would cause a letter of inquiry as to the explanation of the difference like proceeds from a loan or refinancing all good reasons for the difference. BUT it would also raise questions of having several bank accounts without good reason. A great Auditing Tool

Posted by: JOHN SLATTERY EA | Nov 19, 2012 3:45:57 PM

With current administration, corruption is not a bug, its a feature.

Posted by: DonM | Nov 19, 2012 4:31:00 PM

Sometimes a child having a refund will have it deposited to a parents account rather than opting for the slower check.

Posted by: Ardel Brink | Nov 19, 2012 5:14:19 PM

"Now lets talk 1099's
get the banks to turn over deposit totals by SSN EIN TIN numbers and then computer compare to filed tax returns
differences would cause a letter of inquiry as to the explanation of the difference like proceeds from a loan or refinancing all good reasons for the difference. BUT it would also raise questions of having several bank accounts without good reason. A great Auditing Tool"
How about then sharing this infor with the welfar offices??

Posted by: Ed | Nov 21, 2012 7:40:38 PM

First, I have never prepared a split refund deposit.
Second, the returns associated with paid preparers are easily identified.

Some may be fraud. However it is most likely that the agents are moonlighting preparing tax returns disregarding their employment restrictions.

Perhaps some preparers found an ingenious way to avoid bank fees.

Posted by: rich | Nov 24, 2012 12:16:57 PM