New Technology Will Prevent Tax Fraud

August 28, 2013 Taxation in USA

Out with the old technologyWASHINGTON D.C. – The IRS’s reliance on outdated software allows billions of dollars of tax fraud to remain undetected, and not enough is being done by the IRS to improve the technologies used to detect such crimes.

In a report released earlier this week the Treasury Inspector General for Tax Administration (TIGTA) said that Electronic Fraud Detection System (EFDS) used by the IRS is no longer adequate for its original purpose, and now allows an estimated USD 19.2 billion in tax fraud to occur and remain undetected every year.

The IRS is currently in the process of implementing a new system, the Return Review Program (RRP), which is intended to “…significantly enhance the IRS’s capabilities to prevent, detect, and resolve tax refund fraud.”

The TIGTA noted that the EFDS, in its current state, would be inefficient to maintain and operate beyond the year 2015, and the replacement system needs to be operational before that time.

However despite the urgency, the IRS has still not completed the development of major aspects of the technology, and still has not finalized a working operational plan for the system.

In the report the Office of the Inspector General provided the IRS with six recommendations to improve and speed up the rollout, but noted that there is a growing concern that if the implementation is not sped up, the RRP will not be operational until at least 2016, widening the window of opportunity for further tax fraud.

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