IRS Auto-Issued Thousands of “Erroneous” Refunds Before Verification Process Was Complete

The government once again closes out another year at its best. The Internal Revenue Service (IRS) distributed over $46 million in tax refunds accidentally due to what they claimed to be another computer glitch.

“TIGTA identified that because of a programming error, over $27 million of refunds were erroneously issued for 13,043 Tax Year 2013 tax returns,” the Treasury Inspector General for Tax Administration (TIGTA) audit said. “The programming error is overriding the IRS’s two-week processing delay on some refund tax returns that are identified by the IRS as potentially fraudulent.”

However, this so-called glitch–which is more a policy than a glitch–is going to be a painful one for millions of Americans. The mistake could potentially cost taxpayers up to $230 million over the next five years, and possibly delay expected future tax refunds in order to avoid making similiar mistakes.

The IRS gaffe was fueled by ineffective fraud monitoring and internal oversight. The TIGTA said thousands of returns were flagged for claiming a “questionable tax credit” but were automatically issued before the IRS could complete its verification process. They also said their audit shows investigators uncovered 3,910 potentially fraudulent tax returns totaling roughly $19 million.

The millions of taxpayers who look forward to that end of the year refund may have to just wait a bit longer than usual.