Phoenix, AZ (PRWEB) November 16, 2011
Technology developed by Randall C. Sorensen, CPA, would cure the gross overpayment of Earned Income Credit as a result of fraud. The Internal Revenue Service estimates that 23 to 28 percent of Earned Income Credit payments are issued improperly each year, which equates to between $11 billion and $13 billion.
The software is called EICCA (Earned Income Credit Compliance Audit) and will identify individuals who defraud the Treasury and increase the tax burden on American taxpayers. Randall C. Sorensen, CPA, has practiced as a financial forensic expert for over 25 years. He first became aware of the ease with which individuals defraud the US Treasury in 2004 when Mr. Sorensen encountered a case in his accounting firm featuring a Florida resident who was making a lost wage claim to an insurance company. Mr. Sorensen relates, “In reviewing her tax return, I determined that she reported $12,000 in income from her cleaning business. However, she had exactly $0 in expenses. No mops, brooms, cleaning supplies or gas expense to drive to her appointments. Here is how the scam works today:
Taxpayer claims $13,500 from phantom cleaning business. The individual by claiming two dependents qualifies for earned income and child credits totaling $6,500. The IRS will withhold and deposit $1,900 into her Social Security Retirement prior to mailing her a check for $4,600. This translates into a 20 year payout of $100,000 in tax refunds, $115,000 in Social Security and $120,000 in Medicare benefits for a grand theft of $335,000”.
The compliance test is fast and efficient. Beta testing was completed on 500,000 tax returns in just 30 minutes. However, by minimizing the data fields, Mr. Sorensen believes he can test ALL 27 million EIC tax filers in 5 hours. Mr. Sorensen states: “We estimate that EICCA could identify $2.1 billion in earned income credit fraud and reduce the Tax Gap by another $800 million for a total savings of $2.9 billion in 2012.” If 1 million fraudulent returns are identified for five consecutive years, this will reduce the federal deficit $116 billion over the next ten years. Mr. Sorensen sent his proposal to the Super Committee, 126 members of Congress and the Commissioner of the IRS. Mr. Sorensen states. “The Super Committee should take me up on my challenge. The IRS won’t have to invest a single dollar in technology that’s already proven. What does the Super Committee have to lose?”
Randall Sorensen, CPA has been practicing accounting for over 30 years and has specifically worked as a forensic accountant for over 25 years. Randall Sorensen’s accounting practice is located in Phoenix, Arizona. Mr. Sorensen can be reached at 1-480-831-1169.