Tax Refund

False return lawsuits spur IRS into action

Last August, CNBC reported an alarming form of identity theft that undoubtedly made U.S. taxpayers worried: tax refund fraud. According to a report released by the IRS inspector general, the government body had doled out billions of dollars in refunds to scam artists that had filed fraudulent returns under the names of unsuspecting citizens.

A false return may stop you
from getting your funds.

Such scams are reportedly commonplace, the source states, a fact that may be due to the short-staffed agency's negligence.

"Unfortunately, the IRS is not using information that it currently has, nor information that could be available to them," Inspector General J. Russell George told the media outlet.

George is not alone in that estimation. Last month, Tampa Bay Online reported that 16 individuals launched suits against the IRS over the matter. Because of the false returns filed in their names, the taxpayers were unable to collect the money the IRS legally owed them.

Regardless of whether the IRS fraud could have been detected and prevented by the agency beforehand, the plaintiffs, all represented by a  Florida attorney, have voiced their frustration with how they've been treated by the IRS in the aftermath.

The local news outlet reported that "they get the runaround from the IRS. They make promises that are not kept," and  "They're told it will take 60 days. Nothing happens. Then they call back and are put off again."

It appears that there have been repeated attempts to file a class-action suit against the financial body on behalf of identity theft victims still awaiting their refunds. However, his efforts have deflated by a recurring event: Once the plaintiffs take legal action against the entity, they receive their refunds shortly after filing.

Tax attorneys have the specific experience necessary for navigating the IRS within this legislative minefield, and can prove to be invaluable asset for those seeking recompense from the IRS.

As a tax attorney with over 30 years of experience, Steve Moskowitz says "usually the IRS is very good about routine administrative matters, though I haven’t reviewed the pleadings in this case, I am a little surprised that the taxpayers have had to resort to such measures in order to obtain their tax refunds. Further, my law firm, Moskowitz LLP, a tax law firm based in San Francisco has been watching the Department of Justice’s tax prosecutions of various tax frauds closely. I'd bet that the IRS has learned a lot from prosecuting these cases and will make adjustments to their security protocols."     

Tax attorneys have been specifically trained to navigate the bureaucracy within this legislative minefield, and can prove to be invaluable asset for those seeking recompense from the IRS.