Initially, the problem lies with scammers. People who steal the social security numbers of other people, pilfer others W-2 information, or people who are simply lying on their taxes are the main group to blame for this newfound delay of income tax checks. This is a state and federal problem.
The IRS reported that in 2015, they detected over 160,000 cases of either identity theft or fraud in relation to income taxes. Those fraudulent returns would have accounted for $787,000 dollars’ worth of paid income taxes.
Obviously, this actually is a serious problem as millions of dollars would have been sent into the hands of scammers and honest taxpayers would have had to bear the brunt of the deceit. Still, this is only half of the problem.
Government Imposed Delays
As you can probably imagine, detecting fraud can be a complex and time-consuming process which is why you will probably be made to wait a longer period than usual to get your income tax check in the mail this year. State tax agencies all across the country are taking extra precautions this year to prevent fraud due to the huge spike in attempted identity theft in 2015.
These precautions include checking employment history and comparing them to files that the state has on record. It also includes scanning with a fine-toothed comb millions of W-2 forms and other employment information.
In Alabama for instance, the state tax agency is requiring taxpayers to fill out detailed questionnaires to help better identify tax submissions. Alabama is also asking employers to send them W-2 forms much earlier to try and offset the delay. In the end, if any suspicious files are caught, there will be a detailed investigation into the claim which can cause the longest delays.
While precautions like the ones being taken in Alabama seem like a good idea even if it means waiting longer for your check, these tactics may cross the line. National Taxpayer Advocate representative Nina Olson reported that in 2015, 40% of the returns withheld and investigated by the IRS were actually legitimate. Almost half of all taxpayers in the nation were made to wait an abnormally long time for their returns last year and the problem is only getting worse, which is yet another reason why you your 2016 return will likely be delayed. State and federal tax authorities urge citizens to file as early as possible but acknowledge that this will likely offset delays by a minimal amount.