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Politics and Government

Senate bill tries to combat tax refund fraud

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Ken Teegardin
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Flickr

Sen. Charles Schumer used this year's tax deadline to call for more help for the victims of tax refund fraud, which he said is the most common form of identity fraud.

The New York Democrat told reporters Wednesday that he is pushing legislation that would create a new resource at the Internal Revenue Service for the victims of refund fraud, which he says affected 70,000 New Yorkers and 2.3 million Americans last year.

Tax refund fraud occurs when thieves use a person's social security number or other piece of information to submit a bogus tax return in order to claim their refund.  And Schumer says filing online has made it that much easier to commit fraud.

"But the online tax preparers have made identity theft far easier. Because the identity fraudsters just you know file with their online tax preparer, with no questions asked. Even with a false number," said the senator. He added that he is not blaming online tax preparation companies.

Schumer says fraudsters can quickly submit hundreds of false tax returns online. They then get their refund via prepaid debit cards which can't be traced.

The bill Schumer supports would also require the IRS to issue tax refunds to victims within 90 days. Schumer says cases now take 300 days to be resolved on average. The IRS has blamed congress’ cuts to its funding for causing the longer wait times. Schumer says Democrats have proposed restoring funding to the IRS, but Republicans so far have not agreed.