Is the cost of the IRS' new fraud detection program justified?

The Internal Revenue Service has electronic procedures for reviewing tax returns for indicia of fraud. Yet by the IRS’ own admission, their fraud detection system may be outdated.

The current system was developed in 1994. Called the Electronic Fraud Detection System, the program's primary goal is to avoid the issuance of fraudulent refunds. The new program is called the Return Review Program, which reportedly takes advantage of advances made in new technology since 1994. 

Yet replacing the EFDS with the RRP seems to have hit a roadblock. According to an IRS official, a plan is not yet in place for completely retiring the EFDS. If both fraud detection programs are run simultaneously, the additional operational and maintenance costs to taxpayers might total around $18 million per year.

Businesses are clearly a focus area of fraud detection programs, as the IRS wants to avoid paying out refunds to imaginary businesses. Yet will the new system create tax controversies where none should rightfully exist? Regardless, the process for responding to a tax controversy will presumably remain the same.

Under either fraud detection system, an attorney can help represent an individual or corporate taxpayer in a broad range of interactions, including collection, examination and appeal matters before the IRS. If administrative remedies do not result in a resolution, an attorney can also represent a taxpayer in court. Our law firm focuses on serving business tax clients in Washington, D.C. and the surrounding communities in Maryland and Northern Virginia. We understand how to effectively negotiate with local IRS counsel. Check out our firm’s website to learn more.

Source: Accounting Today, “IRS Struggling to Ditch Outdated Fraud Detection System,” Michael Cohn, Nov. 25, 2015

No Comments

Leave a comment
Comment Information
  • ABA | American Bar Association
  • AV Preeminent | Peer Rated for Highest level of Professional Excellence | 2018
  • Virginia State Bar | 1938
  • Super lawyer | 2018
  • DC Bar
  • American Bar Academy of Attorney - CPAs | The power of the dual view
Email Our Team

Contact Us to Get Started Today

Located in the Washington, D.C area, we serve clients in the District of Columbia, Maryland and Northern Virginia, as well as across the country and overseas. For a free initial consultation, call 202-381-1261 or complete our brief online form.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Six Convenient Office Locations in and around the DC Metropolitan Area

Washington, D.C.
1629 K Street NW, Suite 300
Washington, D.C. 20006

Phone: 202-618-1873
Fax: 888-235-8405
Map & Directions

Columbia Office
10440 Little Patuxent Parkway, Suite 300
Columbia, MD 21044

Phone: 410-497-5947
Fax: 888-235-8405
Map & Directions

Annapolis Office
888 Bestgate Road
Suite 400
Annapolis, MD 21401

Phone: 410-497-5947
Fax: 888-235-8405
Map & Directions

Fairfax Office
8280 Willow Oaks Corporate Drive
Suite 600
Fairfax, VA 22031

Phone: 703-621-7169
Fax: 888-235-8405
Map & Directions

Rockville Office
199 E. Montgomery Avenue
Suite 100
Rockville, MD 20850

Phone: 240-599-5009
Fax: 888-235-8405
Map & Directions

Baltimore Office
400 East Pratt Street
8th Floor
Baltimore, MD 21202

Phone: 443-743-3381
Fax: 888-235-8405
Map & Directions