Last summer, the Washington Times reported that the IRS paid out more than $24 billion dollars in refunds for 2016 based on potentially incorrect or fraudulent tax credits.
According to the audit, the biggest misused tax credit was the Earned Income Tax Credit—which accounted for almost $17 billion in improper payouts. This figure also includes up to $118 million paid in Earned Income Tax Credits to people who aren’t even authorized to work in the United States.
In 2015, Congress passed a law that may help reduce the amount of improper refunds given. Under provisions of the “Protecting Americans from Tax Hikes Act” (PATH Act), the IRS may delay some refunds for early filers who claim the EITC or Additional Child Tax Credit. This delay may give officials more time to identify and flag suspicious returns. Although the PATH Act was in effect for the 2016 tax year, the IRS says it was not yet properly prepared to implement it.
Another provision of law that may help reduce fraud: some individuals will be required to renew Individual Taxpayer Identification Numbers (ITIN). ITINs are provided as tax identification for individuals who must pay taxes but do not have a Social Security Number. As of October 2016, any ITIN that hasn’t been used on a tax return at least once in the past three years must be renewed by the taxpayer.
What We Can Learn
What does this Washington Times article have to do with owing back taxes? It serves as a reminder that even the IRS makes mistakes. If you have been hit with a large tax bill, you have the right to have that bill verified for accuracy. You also have the right to hire an attorney to negotiate terms with the IRS on your behalf. Thus, even if you legitimately owe a large amount of money, we may be able to work to get your balance reduced or deferred.
Don’t face your tax woes alone; let us help you resolve them. To learn more, give us a call today for an appointment. We can be reached at 720-398-6088.