In an effort to combat tax credit-related fraud, the Internal Revenue Service (IRS) has launched an offensive that requires taxpayers to verify their identity. This measure focuses on ensuring that the claimed tax credits are legitimate and thus avoid inflated refunds based on incorrect or fraudulent information.
Last week, the IRS updated an initial statement from May 14, stating that “taxpayers who improperly claimed these credits still need to authenticate their identity.” This authentication process is essential before any amended tax return is approved to remove incorrectly claimed tax credits.
The IRS emphasized that it will not approve any amended returns until the taxpayer has verified his or her identity. This step is crucial to avoid penalties and potential follow-up actions by the IRS.
Tax Scams and Social Media
The IRS consumer alert highlights that a series of tax scams and inaccurate social media tips led to “thousands of taxpayers filing inflated refund claims during the past tax filing season.” These scams focused on the Fuel Tax Credit, the Family and Sick Leave Credit, and household employment taxes.
The IRS has warned taxpayers not to fall for these scams and to carefully check any information before filing their returns.
Changes to the Verification Process
Last week, the IRS adjusted its statement on identity verification. Originally, the IRS indicated that taxpayers who claimed incorrect credits did not need to visit a Taxpayer Assistance Center. However, this advice changed, suggesting that the IRS wanted to avoid a flood of taxpayers at its May 18 events, when walk-in hours were offered in several cities, including Detroit.
Despite this, a large crowd, estimated at less than 1,000 people, came to the IRS office in Detroit seeking in-person help. Now, there are no more walk-in hours scheduled for Saturdays, and the IRS requires identity verification before amending any return in cases of incorrectly claimed credits.
Taxpayer Assistance Centers
IRS taxpayer assistance centers are open from 8:30 am to 4:30 pm Monday through Friday and work by appointment only. To schedule an appointment, taxpayers should call 844-545-5640.
Taxpayers who receive letters from the IRS, called Notice 3176c, should pay attention to the instructions. These letters apply to potentially frivolous tax returns that include incorrect claims for tax credits.
Steps to Avoid Sanctions from IRS
The IRS advises taxpayers who incorrectly filed these claims to immediately file an accurate tax return without the incorrect claims. Taxpayers can use the IRS tool, “Should I file an amended return?” in IRS.gov , to determine if they need to amend their statement. However, they must verify their identity before making any amendments.
In cases where the IRS detects errors, the agency often corrects these during processing. But in situations of improperly claimed credits, taxpayers must file an amended return to correct the error.
Many taxpayers waiting in the long lines last Saturday didn’t know why they needed to verify their identities. Some did not believe they had incorrectly claimed credits, and others, like a 17-year-old girl filing her first return, needed to verify their identity simply because it was the first time they were filing.
One woman in the line mentioned that she was told she had to amend a previous tax return. These types of situations underscore the importance of identity verification in the IRS process to prevent fraud.
When the IRS suspects a fraudulent return, it will not process the refund until it verifies the taxpayer’s identity. This process can cause significant delays, especially for victims of identity theft. In 2023, nearly 500,000 people waited an average of 19 months for the IRS to resolve their cases, according to National Taxpayer Advocate Erin Collins.
