Possible Refund Delays This Season

Reprinted from Trendlines

False positives for fraud can drag things out 11 weeks … or longer.

By CPA Trendlines

Tax preparers might do well to prepare their clients for possible delays due to automated inefficiencies at the Internal Revenue Service, according to a report from the Tax Advocate Service.

The delays, which have been reported as a serious problem since 2003, are caused by automatic freezing of refunds when the IRS’s Pre-Refund Wage Verification (also known as Income Wage Verification) identifies suspected false wages and withholding.

The fundamental problem is that the false positive rate for the Electronic Fraud Detection System in 2015 was a staggering 35 percent. That’s not a whole lot better than random identification would be.

The problem extends to the Taxpayer Protection Program, which is grappling with identity theft. There the false positive rate leaped from 19.8 percent in 2014 to 36.2 percent in 2015.

The problem is exacerbated by taxpayers’ inability to reach a live agent in the Integrity & Verification Operation unit. Taxpayers can neither find out the cause of the delay nor offer explanations that might clear up the problem. Consequently, the average delays for taxpayers who eventually are issued their refunds – that is to say, taxpayers innocent of any false withholding – is nothing less than 18 weeks.


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