The IRS has dramatically improved their detection of fraudulent refunds according to a report from the Treasury Inspector General for Tax Administration. They identified 775.723 fraudulent refunds last year. That represents a 171% increase over the prior year. This is $4.4 billion saved from going to fraud. On source of increase scrutiny were tax returns filed by prisoners. These have a higher rate of fraud than other tax filers. Inspector General J. Russell George praised the IRS for their improved performance.

This report covers fraudulent filing. It did not cover mistakes or errors. It is a good sign that the IRS can now automatically find a large amount of fraud. There will never be enough resources to find all the fraud with just audits.