Measures Proposed to Fight Tax Refund Fraud May Cause Problems for Honest Taxpayers, Warns Expert

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IRSAC recommendations are severe and unworkable, says CEO of NFA Tax Help

While tax refund fraud is a growing problem, new anti-fraud measures recommended by an IRS advisor group go too far, says a Houston tax expert.

"These recommendations risk throwing out the baby with the bath water," says Dean Alexander, CEO of NFA Tax Help (, a firm that helps people with tax problems.

The recommendations, recently issued by the IRS Advisory Council (IRSAC), propose that the IRS delay tax refunds until it has fully verified the tax payer's identity.

The IRSAC recommendation is designed to fight tax refund fraud, a relatively new form of identity theft in which thieves use a stolen social security number to file a fake tax return with the IRS and obtain an undeserved refund. Tax refund fraud become widespread in recent years. The IRS Inspector General has estimated that the IRS could issue as much as $21 billion in fraudulent tax refunds over the next five years.

"[It] appears that the easiest way to combat identity theft tax fraud is to delay refunds until verification of identity can be made," says the IRSAC 2012 Annual Report. "While the cost of this will be taxpayer frustration with delayed refunds, the gains achieved by stopping fraudulent returns from being filed and fraudulent refunds from being issued far outweigh this frustration."

"I disagree," says Alexander. "I don't think the Council adequately recognizes how important their tax refund is to many people."

Alexander says he has seen clients applying their refunds to major household bills, and even using them to cover delayed medical expenses.

"These are important things," he says, "If people don't owe back taxes, they should get their refund as quickly as possible."

Alexander also says that the IRSAC's recommendations for verifying a taxpayer's identity may be unworkable.

"The report suggests that the IRS consider using fingerprints given at the local police station to verify your identity," says Dean. "Have they really considered the enormous inconvenience this introduces, not to mention level of bureaucracy that would create?"

Dean says that the IRS is already using screening filters that catch much tax refund fraud. These measures are already flagging twice as many returns for review this year compared to last year, according to Dean.

"The solution is better screening," says Dean, "Not blanket measures that hurt the innocent."

The IRSAC is a group designed to provide public input on IRS tax policies and issues. The group's recommendations do not set IRS policies, but are seriously considered by the IRS. A copy of the IRSAC annual report can be viewed online at

About NFA Tax Help
NFA Tax Help is a firm helping clients across the U.S. with tax preparation, tax resolution and IRS representation. The company has been accredited by the Better Business Bureau and carries their A+ rating.

For more information, contact at NFA Tax Help at (877) 758-8537 or visit their website at

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Tom Anton
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