What We Could Have Done With the $5.8 Billion the Government Lost to Tax ID Theft

If you had an extra $5.8 billion dollars, what would you do with the cash?

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The $5.8 billion in refunds issued in 2013 were paid to identity thieves who filed fraudulent returns using stolen names, Social Security numbers and fake W-2 forms. With tax identity theft skyrocketing in recent years, it doesn’t appear anyone knows how to stop the problem. To put this into perspective, we are currently losing the equivalent of Chad’s annual GDP. We’re talking about a whole lot of money here.

I asked members of Congress where that money could have made a difference. Here’s how they replied. (A quick note: Several Republican members of Congress were asked to comment and declined.)

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Sen. Gary C. Peters, D-Mich.

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Doubtless, there are countless projects that might be jump-started or enhanced with $5.8 billion.

If we didn’t turn the $5.8 billion into new programs or to bolster existing ones, there’s a more direct way to deploy it. That money could be invested in initiatives that would educate and protect consumers and businesses against the perils of data breaches and identity theft. What could you do with that kind of money? I’m going out on a limb here, but I think it might be possible to keep more money in the Treasury and limit its refund to rightful taxpayers by investing in even more sophisticated filtering systems as well as more people on the job to make tax filing, taxpayer vetting and the tax fraud remediation processes more efficient and effective.

Hopefully, the observations by our lawmakers will draw attention to the continuing disaster of identity theft and the desperate need for the government to step up its efforts to stem the outgoing tide of Americans’ hard-earned tax dollars. So, what would you do with the $5.8 billion?

Any opinions expressed in this column are solely those of the author.