The Treasury Inspector General for Tax Administration (TIGTA) – which was created by Congress in 1999 to provide oversight of the Internal Revenue Service – claimed credit this week for helping the IRS prevent the potentially fraudulent use of $3.5 billion of tax credits.
The tax credits in question – Employee Retention Credits (ERC) and Sick and Family Leave Credits – were created as part of pandemic relief legislation approved by Congress.
TIGTA said on April 24 that its Office of Investigations uncovered a scheme by fraudsters to use those credits – obtained by using employer identification tax identifier numbers – by claiming them on tax returns for businesses which showed no signs of having active operations. TIGTA said it notified the IRS, which then “put controls in place to prevent similar claims.”
TIGTA did not say whether any of the fraudsters have been brought to justice but did say it’s working with IRS Criminal Investigation Special Agents “to hold those responsible for the scheme accountable.”
“This is a great example of how TIGTA can save the Federal government and taxpayers billions of dollars,” said Acting Inspector General Heather Hill.
“We’re helping prevent improper payments before they happen ? not paying and chasing them after the fact when they can be more expensive and difficult to recover,” Hill said. “I’m proud of the work our Office Investigations did to identify this scheme and alert the IRS so they could implement appropriate fraud controls.”
TIGTA said it was able to spot the tax credit scammers by deploying supplemental Inflation Reduction Act funding to identify fraud schemes.
“We’re strategically using our budget to invest in innovative tools and hire experienced employees with sought-after technical skills who are dedicated to protecting taxpayer dollars,” said Trevor Nelson, TIGTA’s Deputy Inspector General for Investigations.
“This enables us to quickly identify emerging fraud schemes with potentially significant financial consequences to the federal government.”
