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Congress to IRS: All hands on deck on tax fraud

The Senate's top two tax-writers told the IRS on Thursday that the government would need an all-hands-on-deck response to battle tax refund fraud.

"Due to the complex nature of tax schemes and the large volume of fraudulent transactions, the committee cannot fully address this problem on its own," said Senate Finance Committee Chairman Orrin HatchOrrin Grant HatchMellman: What happened after Ginsburg? Bottom line Bottom line MORE (R-Utah) and the panel's top Democrat, Sen. Ron WydenRonald (Ron) Lee WydenHillicon Valley: Government used Patriot Act to gather website visitor logs in 2019 | Defense bill leaves out Section 230 repeal, includes White House cyber czar position | Officials warn hackers are targeting vaccine supply chain Government used Patriot Act to gather website visitor logs in 2019 Despite veto threat, Congress presses ahead on defense bill MORE (Ore.).

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"Any solution must involve coordination between Congress, the IRS, state agencies, law enforcement, and the tax preparation industry," Hatch and Wyden added in their letter to the IRS chief, John Koskinen.

Hatch and Wyden's letter comes after the IRS recently acknowledged its most recent setback in battling tax fraud; thieves, thought to be from organized crime syndicates, stole tax records from more than 100,000 taxpayers off an agency website. 

Republicans were especially critical of the IRS's handling of that situation. But on Thursday, Hatch and Wyden said they were pleased to see that the IRS and private tax software companies are close to issuing recommendations on how to combat tax fraud. 

Those recommendations are expected to examine log-in authentication for taxpayers, one of the issues in the IRS's recent breach.

Tax refund fraud has become an increasingly difficult problem for the IRS in recent years. The IRS paid out roughly $5.8 billion to fraudsters in 2013, according to the most recent data from the Government Accountability Office.

But Hatch and Wyden ended their letter to Koskinen on a positive note: "With concerted action, we are confident that there is time to make improvements before the next filing season, but we must act quickly."