IRS Sent 343 Refunds Worth $156K to 1 Address--in Shanghai, China

By Michael W. Chapman | November 7, 2013 | 4:27pm EST

(AP Photo/Susan Walsh)

( – A new audit-report from the Treasury Inspector General for Tax Administration (TIGTA) shows that the IRS sent at least 343 potentially fraudulent tax returns in 2011 to the same, single address in Shanghai, China, for a total of $156,533 in tax refunds.

The same report also shows that 655 potentially fraudulent tax refunds totaling $220,489 were sent to the same address in Kaunas, Lithuania. Other potentially fraudulent refunds, 580 of them, were sent to the same address in Orlando, Fla.; 355 to the same address in Lakewood, Colo; and another 291 to another single address in Orlando, Fla.

In total, those potentially fraudulent refunds totaled $2,715,391.

On a related note, the TIGTA report, which analyzed Tax Year 2011 tax returns, showed that at least 3,145 persons applied for potentially fraudulent Individual Tax Identification Numbers from the same address at five different locations in the United States: one in Santa Ana, Calif; one in Salinas, Calif.; one in Mountlake Terrace, Wash.; one in Milwaukee, Wisc.; and one in Sanford, N.C.

Moreover, the top five countries (not counting the USA)  the IRS sent tax refunds to, to addresses that were potentially fraudulent were Bulgaria, 701 tax returns; Lithuania, 676 returns; Ireland, 657 returns; China 443 returns; and Canada, 337 tax returns.

U.S. currency. (AP Photo)

In those countries, the refunds were not sent to the same address respectively, but many were and the audit tagged characteristics in other addresses that it determined indicated potential fraudulence.

The total refunds sent to those 5 countries equaled  $1,941,544.

The TIGTA report is entitled Detection Has Improved; However, Identity Theft Continues to Result in Billions of Dollars in Potentially Fraudulent Tax Refunds, and was dated for release on Sept. 20, 2013.  A similar report was filed in July 2012.  The updated audit was done at the request of Sen. Bill Nelson (D-Fla.), who is the chairman of the Senate finance Subcommittee on Fiscal Responsibility and Economic Growth. (See TIGTA Report.pdf )

In the new report, TIGTA looked for commonalities and characteristics in tax returns and refunds that signal they are potentially fraudulent.  TIGTA states that the fundamental problem is identity theft. As the audit reads, “Identity theft continues to be a serious and growing problem which has a significant impact on tax administration. Identity theft for the purpose of tax fraud occurs when an individual uses another person’s name and Individual Taxpayer Identification Number (similar to a Social Security Number [SSN]) to file a fraudulent tax return to obtain a fraudulent tax refund. Unscrupulous individuals are stealing identities at an alarming rate for this purpose.”

For this report, TIGTA found there were “approximately 1.1 million undetected tax returns filed using SSNs that have the same characteristics of IRS-confirmed identity theft tax returns.” These fraudulent returns resulted in a total of $3.6 billion in potentially fraudulent refunds.

Flag for the Communist People's Republic of China. (AP)

At the same time, TIGTA found that in Tax Year 2011, there were at least 141,000 tax returns filed with potentially fraudulent ITINs, which resulted in potentially fraudulent tax refunds totaling $385 million. (See TIGTA Report.pdf)

ITINs, as the IRS explains, are tax processing numbers issued to individuals “who are required to have a U.S. taxpayer identification number but who do not have, and are not eligible to obtain a Social Security Number (SSN) from the Social Security Administration (SSA). ITINs are issued regardless of immigration status because both resident and nonresident aliens may have a U.S. filing or reporting requirement under the Internal Revenue Code.”

In addition to the hundreds of tax refunds the IRS sent to single addresses in several cities here and abroad, the TIGTA report shows that 5,114 ITINs were assigned to people at only 5 addresses in the United States:  39 ITINs assigned to the same address in Salinas, Ca.; 1,947 to an address in Mountlake Terrace, Wash.; 1,841 to the same address in Milwaukee, Wisc.,; and 1,287 to the same address in Sanford, N.C.

Back in June, reported that $43,378,040 in refunds were sent by the IRS to 23,994 ‘unauthorized’ aliens at one address in Atlanta, Ga.

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