July 19, 1994
New Procedures to Fight Refund Fraud
WASHINGTON - The Internal Revenue Service today
announced two new procedures it will implement next year to better protect the tax system
from refund fraud.
The changes are:
- the IRS will expand its suitability check on those applying to participate in electronic
filing as electronic return originators (EROs) to include checks of criminal records and
credit reports; and
- the IRS will delay refund claims lacking proper taxpayer identification numbers
(TINs)--for individuals, their social security numbers.
"To withdraw money from a financial institution, you must use a correct account
number or personal identification number," said IRS Commissioner Margaret Milner
Richardson in testimony before the Senate Governmental Affairs Committee. "We believe
that before monies are paid from the Federal treasury, taxpayers should also have to
provide a correct, valid PIN."
Taxpayers should be sure that they have correct social security numbers for themselves,
their spouses and dependents now, to avoid possible delays at tax time. Persons who need
to obtain numbers for themselves or their dependents--or to resolve questions about their
numbers--should contact a Social Security Administration office.
EROs are persons who either prepare tax returns that will be filed electronically or
collect prepared returns from taxpayers who want electronic filing.
First-time EROs will have to submit a set of fingerprints with their applications and
must authorize the IRS to obtain a credit report. These checks will help the IRS verify
identities and confirm the absence of criminal convictions. The FBI will check the
fingerprints against its criminal record files. The IRS already checks the tax records of
ERO applicants to identify any tax compliance problems that would bar a person from the
Electronic Filing Program.
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