Stolen Employer ID Numbers Causing Headaches for IRS

Internal Revenue Service reports that it is losing billions of dollars to fraudsters every year from stolen or fraudulent Employer Identification Numbers, or EINs.

In a government report released Thursday by J. Russell George, Treasury Inspector General for Tax Administration, the IRS needs to do more to prevent fraud from the use of stolen EINs despite the fact that the agency already has some processes in place to authenticate individuals who apply for an EIN.

The government's review of 2011 e-filed individual tax returns identified 767,071 tax returns with potentially fraudulent refunds totaling almost $2.3 billion. 

There were 285,670 EINs used on these tax returns: 277,624 were stolen EINs used to report false income and withholding on 752,656 tax returns with potentially fraudulent refunds issued totaling more than $2.2 billion. 

8,046 were falsely obtained EINs used to report false income and withholding on 14,415 tax returns with potentially fraudulent refunds issued totaling more than $50 million.

For more information about this issue, see Accounting Today or contact Neikirk, Mahoney & Smith CPAs.