So I am reading a New York Times article off my twitter stream that catches my eye:
I'm thinking, "Ah this can't be too big of a problem can it?" There's tax preparer fraud, there's outright filer fraud, but people filing fake tax returns? Over $5B of returns are still not caught, and it could be much more in the future as the Times makes this issue public and more criminals become white collar. And as Americans abroad, who rarely file, can be used as the new guinea pigs for fake returns. That's another 5M returns that can be faked when they get tired of faking returns of seniors and youth and start to target these folks abroad who have forgotten to file.
But there is a solution in Canada, called the CRA "notice of assessment" which I receive every time I file a Canadian tax return. You can even get a replacement one online if you need one. It is a confirmation of the receipt of my tax filing, and a friendly reminder of how much room I have in my retirement plans for contributions (RRSP). This is a straightforward exercise that happens to the millions of tak filers in Canada and has been in effect at least since the mid 90s. It looks like this:
The IRS could (at a nominal cost of say $1 per mailing) institute this for the 100M returns. You could send one to the current address on file and the previous address one file. If I received one of these babies and I have NOT yet filed for the past tax year, bingo, there's a problem. I should call the IRS and tell them there's an issue, and they'd investigate.
I bet this few hundred million dollar solution would probably eliminate all of this fraud. So why has the IRS invested millions on training and all sorts of other systems and procedures, rather than just send you a receipt of your filing? Heck, even an email receipt would be a nice touch and be faster to avoid issues in the e-future.