New health care law may lead to tax fraud, audit indicatesadmin
As part of the Affordable Care Act, or Obamacare, low-income qualifying individuals can receive subsidies in order to purchase healthcare on the new marketplace.
SAN FRANCISCO, CA, February 12, 2014 /24-7PressRelease/ — As part of the Affordable Care Act, or Obamacare, low-income qualifying individuals can receive subsidies in order to purchase healthcare on the new marketplace. The Internal Revenue Service is responsible for computing who receives those subsidies and delivering them to the proper people.
A new investigation by the Treasury Inspector General for Tax Administration, however, revealed that “critical” portions of the IRS system are prone to failure and that anti-fraud programs are not adequate in revealing who has defrauded the system. “The IRS’ existing fraud detection system may not be capable of identifying ACA refund fraud or schemes prior to the issuance of tax return refunds,” the auditors noted in their report.
Chief Technology Officer Terence Milholland believes the IRS has improved its technology enough to be sufficient to the task. The IRS believes no further corrective action is needed. Still, some members Congress have expressed skepticism and are calling for greater anti-fraud measures. “This audit raises important questions as to whether the IRS can successfully protect taxpayer data against fraud and abuse,” Representatives Diana Black and Patrick Meehan wrote to IRS Commissioner Dan Werfel.
The new healthcare law is not the only way the IRS may be vulnerable to fraud. The auditors from the Treasury Inspector estimated the IRS could issue over $2 billion in fraudulent tax returns in the coming year. Over the next five years that number could rise to over $11 billion. Common fraudulent returns may include false Social Security Numbers or EIN numbers, false claims for eligibility for the Earned Income Tax Credit and underreporting income, among others.
Tax fraud enforcement
Although some question the extent of IRS fraud enforcement capabilities, there is no question that preventing and punishing tax fraud is a high priority for the IRS. With the IRS giving as much as $1.075 trillion in tax credits over the next ten years, according to the Congressional Budget Office, it is no wonder government officials are looking at ways to improve tax fraud enforcement. And while the likelihood of an audit is relatively small (the IRS audits slightly above 1 percent of all individual returns) the IRS is on the lookout for red flags and will pursue an audit when appropriate, in addition to random audits.
Tax fraud is a serious crime punishable by fines and possible jail time. People concerned about tax fraud or who have been accused of tax fraud should contact an experienced criminal tax defense attorney to discuss their situation.
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Posted: February 12th, 2014 under 24/7 PRESS RELEASE.