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6 Answers

Does the IRS really investigate tax fraud claims?

Asked by: kcomment 432 views YA Discussion

If someone reports tax fraud to the IRS do they really investigate the information that they are given? Also, if someone falsely claims a dependent on their taxes and then someone else claims the same person what will be done? Like if the second person has a right to claim the dependent because the dependent lives with them and is taken care of by them, will the IRS find this information out? How will the IRS determine who will the right one to claim the dependent and what will be done to the person who falsely claimed the dependent?

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  • does the irs investigate all fraud claims

6 Answers

  1. chatsplas on Apr 24, 2013 Reply

    So many questions

    YES, IRS is quite good at determining who is entitled to claim a dependent
    The first one to file gets their return handled and refund paid; the second gets their return rejected
    The second then files a paper return, with cover letter, stating the facts (that child resided with them 7 months or 12 months, attended school from their home, received medical care from their home)
    The second states that they are the custodial parent and the child lived with them more than half the year and the child did not provide More than half their own support, and that they have not signed an 8332 granting other parent (anyone else!) the right to claim dependent
    The IRS then sends a letter to first filer requesting their proof that they have right to claim dependent
    IRS can ban the other filer from filing for EITC without a special form or ban them for a number of years from filing if they determine FRAUD
    The IRS demands return of the refund paid in error or through fraud

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  2. Max Hoopla on Apr 24, 2013 Reply

    If two people claim the same person on their tax return the computer automatically catches it and rejects the second return. That person can contest it and IRS determines who is entitled to the exemption. These are ordinarily conflicts between former spouses and do not involve fraud.

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  3. tro on Apr 24, 2013 Reply

    in the scenario you are depicting, it is not up to IRS to prove who is eligible, the rules are well published
    parents have superiority of anyone else but the children or dependents must live with them at least six months and the dependents do not provide more than 50% of their own support
    when it comes to which parent, the parent with the majority ‘nites’ is the one to claim the child(ren) or in a case the majority cannot be determined, the parent with the higher income claims the dependency
    when it comes to non parental custody, the taxpayer has to be in direct relation with the child(ren) ie. the children of your siblings, or grandparents, or legal guardians
    to answer your first question, yes, IRS has a very active Fraud division and that is all they do, complaints that have some merit, are not frivolous complaints will be searched and the perpetrators will be found and penalized

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  4. tracy on Apr 24, 2013 Reply

    Yes! They do.

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  5. Bobbie on Apr 24, 2013 Reply

    The return that would get REJECTED during the 2013 tax filing season would then have to mail a paper copy of the REJECTED return to the CORRECT IRS address for processing during the tax filing season for the IRS to get involved in this matter at that time and start the investigation of both taxpayers for this purpose and time in life.
    Hope that you find the above enclosed information useful. 04/23/2013

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  6. acermill on Apr 24, 2013 Reply

    Yes, the IRS investigates all valid tax fraud reports. It takes them some time to get around to them, especially at this time of year, but they DO investigate. In the case of the double claiming of a dependent, they will QUICKLY catch that, since the SSN of the dependent will show up in the system as being claimed twice. Both taxpayers will be contacted by the IRS in such a situation, and the IRS will determine to which taxpayer the dependent claim belongs (if to EITHER of them). The person wrongly claiming the dependent will have to pay the tax refund back, along with interest and possibly a penalty.

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