Fraud Detection Filters Causing Delays in Some IRS Refunds

The IRS continues to place premium importance on the prevention of identity theft and non-identify theft refund fraud, but its implementation of process improvements and fraud detection filters are creating hardships for taxpayers seeking a refund, as the filters have frequently incorrectly tagged some returns.

Acting National Taxpayer Advocate Bridget Roberts explained in her annual report to Congress that, for the 2019 tax return filing season, the IRS implemented a new fraud detection filter called Filter X. Despite best intentions, however, the filter erroneously marked 1.1 million tax returns for potential fraud, causing unnecessary delays in refunds. Other filters incorrectly flagged legitimately filed returns, registering a false positive rate of 71%.

Despite the significant amount of delayed returns, the new filters have stopped the IRS from issuing nearly $2.7 billion in fraudulent refunds. The agency will continue efforts to improve its filters and processing times for the 2020 tax return filing season, which begins January 27, 2020.

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