Historically, tax turmoil has proven to be the breeding ground for fraud, and the pandemic era is certainly no exception to this pattern. With the introduction of major tax breaks and the expansion of tax credit programs by the United States government as a measure to cushion the harsh economic blows of the pandemic, the Internal Revenue Service (IRS) has been put through an increasing level of stress.
The rising fraudulence
Financial aid packages became the norm during the pandemic, and this presented an opportunity for graft. While aimed at helping those who had been financially set back due to Covid-19, these programs were exploited on staggering scales, with unscrupulous individuals and organized groups positioning themselves as eligible recipients under the expanded tax credit programs. Even with safeguards in place, the quick processing of claims often resulted in fraud slipping through the cracks, leading to the loss of billions.
A daunting task for the IRS
The pandemic imparted a two-fold difficulty onto the IRS. The implementation of the tax credit programs led to an unprecedented influx of claims. With its resources already strained due to a decade-long period of budget cuts, the IRS has found itself in an uphill battle; processing a record number of claims, while simultaneously minimizing fraudulent cases. This Herculean task has led to an alarming amount of fraudulent claims being paid out, while innocent taxpayers, on the other hand, have had to wait longer to receive their deserved reliefs. Reports of individuals receiving child tax credit payments despite having no children are not uncommon stories.
Countermeasures and their effects
In an effort to stem the tide of fraudulent claims, the IRS has increased audits and tightened up claim verifications, procedures that unfortunately resulted in slowing down payouts to legitimate claimants. One noticeable pattern is the disproportionate rate at which low-income individuals are subjected to these audits, causing undue stress and financial uncertainty for these vulnerable parties.
Moving from reactive to proactive measures, the IRS is collaborating with law enforcement agencies and dedicating entire units to sniff out and prosecute tax fraudsters. Moreover, they are leveraging advanced data analytics tools and technologies to help discern the fraudulent from the legitimate.
The narrative of this new chapter in tax policy and its subsequent abuses highlights the challenges of balancing quick financial relief with proper oversight, a conundrum that, while complex, is crucial to address for the smooth functioning of any healthy economy. The measures being taken by the IRS are commendable and a step in the right direction. Therefore, providing more resources and funding to this body should become an immediate priority for the government. In doing so, the endeavor to provide economic relief would be made more efficient, minimizing the risk of fraudulent claims and ensuring that relief reaches those that truly need it. Greater transparency, stricter checks on applications, and cutting-edge technology will be essential in battling this issue.
James Walker is a business journalist with a knack for uncovering the stories behind the numbers and trends shaping the corporate world. At 43 years old, James brings a fresh perspective to business reporting, backed by a solid foundation with a Master’s degree in Business Administration from a well-respected business school. Before stepping into the realm of journalism, James cut his teeth in the finance sector, working as an analyst for a leading investment bank. This experience provided him with an insider’s view of the financial mechanisms driving businesses forward, as well as a critical eye for what makes a company thrive or dive.
As a key business writer for an esteemed online news outlet, James covers a broad spectrum of topics, from startup culture and innovation to in-depth analyses of global market trends. His articles are renowned for their clarity, offering readers a window into the complex world of business without the jargon. James has a particular interest in how technology is reshaping business practices and consumer behavior, a theme that recurs in much of his writing.
James’s approach to business journalism is rooted in the belief that behind every company’s story is a lesson about leadership, strategy, and resilience. Through interviews with business leaders and analyses of companies’ financial health, he seeks to provide his readers with actionable insights and foresight into future trends.
In addition to his written work, James is a regular contributor to business podcasts and webinars, where he discusses the implications of current business news and offers predictions for the future. His engaging delivery and depth of knowledge make him a sought-after commentator on business issues.
James’s commitment to demystifying the business world for his readers has made him an influential voice in business journalism. He not only informs but also inspires his audience to think critically about the forces shaping our economic landscape, making him a valuable resource for professionals and casual readers alike.