OECD

Americans are getting a better deal on taxes than many other countries.

If you just filed your taxes this month, chances are you’re not feeling a huge amount of goodwill toward the U.S. tax system.

Still, you may want to hold off on those plans to move overseas to avoid the tax man.

The Organisation for Economic Co-operation and Development this week released a tax comparison for typical wage earners in it 34 member countries, mainly the world's wealthier, democratic countries in Europe, Asia and the Americas.

Surprise: Most of them are paying a lot more than you.

The OECD report looked at the total labor costs for full-time, private sector workers – that is, gross wages plus whatever taxes the employer is required to pay on that employee’s behalf. Then they calculated how much of that total went to federal, state or regional taxes.

In the U.S., an estimated 29 percent of the average worker’s total labor costs went toward taxes last year.

That’s far lower than Belgium, Germany, Hungary and France, where taxes accounted for about half of an average worker’s labor costs.

There are a few countries where workers are getting more of a tax break. The countries with the lowest tax bills included Mexico, New Zealand and Chile, where just 7 percent of the average worker’s total costs went to taxes.

The OECD found that taxes increased in 26 of the 34 OECD countries last year. The U.S. was one of the few countries to see a decrease because of cuts in Social Security contributions. That offset the end of the Making Work Pay tax credit.

For comparison purposes, the calculations assumed the average worker was single and without children. The OECD did separate calculations for other individuals and families with children in its full report.

Matthias Rumpf, a spokesman for the OECD, said the U.S. ranks lower than average in part because it does not have compulsory health care. That means Americans’ health care costs aren’t included in their total taxes.

The OECD also didn’t include mortgage interest rate deductions in its calculation, in part because it’s difficult to make assumptions about how much a person would pay and thus deduct.

Do you think Americans should be paying more or less in taxes? Discuss it in the comments below or on our Facebook page.

Related:

IRS strikes tough balance as nice bad guy

For identity theft tax victims, paying taxes is a nightmare

Richard Zambito

A slew of appliances sitting on a lawn are part of a garage sale that some municipalities argue have gotten out of hand.

Richard Zambito, vice president of the Parklawn Civic Association in Alexandria, Va., has become the neighborhood’s unofficial garage and yard sale inspector.

In the last few years, Zambito has seen sales go from occasional friendly and benign events that brought the community together to extreme and prolific selling juggernauts.

“Two weeks ago, I drove by a home and they were having an auto sale, 20 cars parked on the lawn,” he explained, adding that some residents are now holding weekly sales. “And I went by another home and saw the yard full of appliances, including vacuum cleaners, washing machines and driers.”

Zambito thinks the sales have become a nuisance, creating traffic and litter problems. He’s on a mission to get county officials to curb them, and he’s even been taking photos of the sales and confronting residents who hold them.

“Last time I took photos they chased me down the road,” he said about residents who were unhappy he’s trying to curtail their roadside retailing.

In South Greensburg, Pa., a borough of Pittsburgh, town council president Clentin Martin also wants to put the kibosh on lawn and driveway bazaars, but he found out that messing with garage sales could be the new third rail of politics.

He just introduced an ordinance that would limit the number of garage sales residents can have every year to four and would charge $5 for each sale. For that, he said, he’s been called a communist. “I’ve gotten more heat on this than anything I’ve ever done,” he said.

Towns from Pittsburgh to Dallas are moving to curb so-called extreme garage sales and many residents are balking.

A sacred American ritual is coming under fire. Tough economic conditions have led to a rise in such home-based vendors who see the process as a way to make a few extra bucks, not just clean out the basement. Cities and towns, which don’t get tax revenues from the sales and have to deal with the traffic problem and sanitation issues related to the driveway trade, are fighting back by imposing fees and asking residents to get permits, many of which limit the sales to only a handful a year.

Today, there are about 45,000 garage sales held every weekend across the U.S., according to TagSellIt.com, and there’s no sign residents will be easing up on the home marketplaces on their own.

“The middle class appears to be shrinking while the lower-classes are growing, and members of the middle class seem to be engaging in thrift behaviors as an adaptive strategy under conditions of downward mobility,” said Todd Goodsell, assistant professor in the department of sociology at Brigham Young University, who has studied local thrift economies.

Indeed, advertisements for garage sales can be seen dotting communities all across the country, especially as the temperatures start to warm up; and ads on online classified sites are prolific. In recent years, garage sale ads on Craigslist have been on the rise, said Susan Mactavish Best, a spokeswoman for the company. She would not provide specifics.

Some municipalities in New York are seeing some locations holding garage sales every weekend, said Steve Silverberg, an attorney in Tarrytown, N.Y., who concentrates on municipal land use and zoning.

Many of these residents, he added, are essentially operating a business from their homes, and many towns don’t allow that in residential areas. In response, local government officials are putting zoning ordinances in place with limitations on the number of sales each home can have per year.

“There are a lot of issues that lead to this. All these cars pulling up, people all over the place, and people who live near don’t particularly care for it,” he explained. “A municipality is allowed to control local zoning.”

Dallas’ city council decided to take control of the burgeoning yard retailers.

Last year, the council decided in a close vote to limit the number of yard sales residents could hold and also require that residents get a permit and pay $15 for each sale.

And the city ordinance has restrictions on the number and placement of yard sale signs residents can put up in the neighborhood: "There is a limit of two garage sales at a premises during any 12 month period and each sale may not exceed more than three consecutive calendar days in length. Only one sign is allowed upon the lot where the sale is taking place. Signs placed on medians, public property or utility poles are illegal."

“It wasn’t about making revenue for the city more than to get something under control that was increasingly growing out of control,” said Dallas council member Dwaine Caraway. “People throughout neighborhoods and communities -- some people, not all -- were taking advantage of it. They’d roll out stuff and roll it back in every weekend. A garage sale to me is you got an old pair of shoes, or an old set of golf clubs or dishes. But this stuff was in boxes. Some with tags on them.”

Caraway admitted he’s gotten some flak from the community for supporting the fee and the council is now considering knocking off $5 from the fee. He wants to keep restrictions on residents, however, especially those who had “opened up weekly businesses and were not paying any taxes either.”

But he added, “no one is going to be thrown in jail. It’s to figure out who are the abusers and the good people. Good people will appreciate it in the long run.”

Aaron LaPedis, author of “The Garage Sale Millionaire”, who has held about 50 garage sales in his lifetime, isn’t so sure.

“We should be allowed as Americans to have a garage sales, make a little money, without being permitted and taxed everywhere we go,” he said. “A normal person would probably have two garage sales a year.”

Where residents go overboard and run businesses from their homes, he said, government officials should crack down, but not on average yard sale enthusiasts. 

Such sales are great for communities and for the environment, he pointed out.

“Having a garage sale is very green because it recycles items,” he said. “People are now going to start throwing away stuff.”

It’s almost tax day, and even if you really waited until the last minute this year, there are options out there for you.

The first thing to keep in mind is that you aren’t alone. The Internal Revenue Service estimates that 20 to 25 percent of taxpayers file in the final weeks before tax day.

Plenty miss the deadline as well: The IRS estimates that about 10.5 million taxpayers filed for an extension last year.

In total, the IRS processed about 145 million returns last year.

The good news: The IRS has made it pretty easy to ask for more time, using an online form that will give you a six-month extension.

The bad news: You still have to get some basic paperwork together to file for the extension. Most importantly, the IRS will ask you to pay up, at least based on the estimate for what you owe.

One thing you probably don’t want to do: Hide under a rock and pretend it isn’t happening. The IRS recommends filing the paperwork and paying what you can by April 17, in order to avoid or minimize late fees and other penalties.

There are also some options for folks who can’t pay. The IRS has expanded a program called “Fresh Start,” to help people who are unemployed and owe taxes, set up payment plans for people who owe less than $50,000 and even work with the IRS to settle some tax liabilities.

If you are filing at the last minute, chances are you’re moving rather quickly. The IRS also has some tips for avoiding common errors at the last minute. Among the common-sense tips: Don’t forget to sign and date the return.

Related:

IRS strikes tough balance as 'nice bad guy'

Mario Tama / Getty Images

Warren Buffett smiles at the New York Stock Exchange before ringing the opening bell on Sept. 30, 2011. The Bufett rule was inspired by his call to tax the rich more.

It's almost tax day, which means that most people have by now seen just exactly how much of our hard-earned money will being going to Uncle Sam this year.

You might have noticed that we’re also hearing a lot more about the so-called Buffett rule.

The White House has been making a hard push for the rule, officially called the Paying a Fair Share Act of 2012. The Senate is scheduled to resume consideration of the bill Monday.

The bill would require people who make more than $1 million and pay less than 30 percent in taxes to pay Uncle Sam more. It got its nickname from billionaire investor Warren Buffett, who famously has called on rich people to pay more in taxes.

The estimated effect of the rule varies widely, but experts do agree on one thing: Even if it passed, the revenue the Buffett rule would bring in wouldn’t do much to help fight the massive federal deficit.

That may not matter so much, however. Even those who are against the Buffett rule concede that the debate isn’t really about whether it would help balance the government’s check book.

Instead, it’s about the idea that the world would seem a little more fair.

“It’s not solving the problem and it’s not fixing the tax system. It’s just addressing an issue that might viscerally bother people,” said Roberton Williams, senior fellow with the Tax Policy Center.

Still, the idea that some upper-class Americans are paying a lower tax rate than some middle-class Americans has clearly touched a nerve. A Gallup poll released Friday found that 60 percent of Americans favor the Buffett rule.

The rule is most heavily favored by Democrats and independents, but even among Republicans 43 percent support it.

To understand why, let’s go back to the origins of the Buffett rule.

Buffett, who made his billions running Berkshire Hathaway, got the debate going last August when he wrote an op-ed in the New York Times complaining that he paid a lower tax rate than anyone else in his office.

The very idea that one of the world’s richest men has a lower tax rate than this secretary created a firestorm.

“There’s something about really rich people with great lifestyles paying less than you or me that’s offensive,” Williams said.

In reality, though, Williams said many wealthy people – mainly “working rich” people such as executives, movie stars and athletes – are probably paying a higher tax rate than most middle-income Americans.

The exceptions are people like Buffett and presidential candidate Mitt Romney, who make a lot of money on investments rather than by drawing a paycheck. Those tend to be taxed at a lower rate.

(President Obama did not make $1 million last year, according to his tax return made public Friday, and paid a tax rate of about 20 percent.)

Conservatives may not like the attention the Buffett rule is getting, but even they admit the fairness issue is what has gotten people talking.

“Taxes must be high simply to spread the wealth, never mind the impact on the economy or government revenue. It's all about ‘fairness,’ baby,” the Wall Street Journal groused in an editorial last week.

Those who oppose it can perhaps take comfort in this Bloomberg story noting that, even if the Buffett rule does pass, wealthy people will likely find ways to get around it.

Related:

Here's who won't be paying federal income taxes

Most Americans say go ahead, tax the rich more

You’ve filed your tax return. Now comes the happy anticipation of wondering how quickly your refund will show up – and grousing when it isn’t in your bank account quickly.

The IRS has for years faced intense pressure to make the painful process of paying taxes more palatable by at least providing a zippy tax refund. But such service may be coming at a price as the Internal Revenue Service faces a surge of identity theft tax fraud, as well as the usual tax cheats.

Some victims complain that much of the fraud could have been avoided if the Internal Revenue Service had more carefully screened the fake return in the first place.

“From a publicity point of view you’re trying to be the nice bad guy,” said Roberton Williams, senior fellow with the Tax Policy Center.

That is a tough balance, he pointed out.

"(They are) supposed to process returns very quickly and worry about the fraud aspect, and at the same time Congress is saying, 'Do it with less money,'" Williams said.

The IRS has struggled with its image for decades, wrangling with a dual role of helping taxpayers file their returns and enforcing against tax cheats.

The agency, once known as the Bureau of Internal Revenue, changed its name to the Internal Revenue Service in 1953 in an early effort to appear more customer-centric, said Joseph Thorndike, director of the Tax History Project for Tax Analysts.

But hatred is not too strong a word to express how some people feel about the agency. In 2010 a tax protester crashed his plane into an IRS office in Austin, Texas, killing himself and an agency employee. At the time a Treasury official said there were more than 1,000 threats a year against IRS employees, a figure that had been climbing.

The IRS also struggles with funding. Last year President Barack Obama sought to boost the agency's $12.1 billion budget by more than $1 billion, so it could hire more workers. Instead Republicans led a successful effort to trim the budget to $11.8 billion. 

Pressure to speed the refunds can be be intense in a soft economy, when individuals – and the economy in general – could use that money.

The IRS processed about 145 million returns last year, and three-fourths of those taxpayers got refunds. The average refund was about $3,000.

But the IRS has stepped up screening efforts to try to stop fraud. Spokesman Terry Lemons said IRS officials have identified about 2 million individual returns for review so far this tax season, out of about 84 million that have been received. That’s about the same number of returns that it reviewed in all of last year.

When the IRS does flag a return for such a fraud screen, Lemons said the delay in sending out a refund will vary widely depending on what agents find.

The IRS also has gradually increased the number of returns that get audited over the past decade or so, following a drop-off in 1998, when the IRS went through a major overhaul to focus more on customer service. It currently audits about 1 percent of all returns, Lemons said.

He concedes it’s tricky.

“On the one hand you have millions and millions of taxpayers who have worked hard and are entitled to refunds, and they should be able to get that as quickly as possible,” Lemons said. On the other hand, he said, the IRS has an obligation to taxpayers to make sure returns are checked thoroughly for potential fraud.

In testimony to a Congressional subcommittee last month, Nina Olson, the taxpayer advocate, said that although taxpayers who are victims of fraud need to be protected, so do the majority of legitimate taxpayers who rely on their refund checks.

“With the introduction of e-filing, combined with the increasing number of refundable credits run through the tax code, our tax system has shifted, for better or worse, to one of instant gratification,” Olson said in the written testimony.

Still, she noted, “The benefit of enjoying such a tax system is somewhat offset by the increased ability of perpetrators to defraud the government.”

Over the years, he said, the IRS has seemed to sway back and forth depending on the political mood and other factors, said Thorndike, the tax historian. Now is one of those times when Thorndike thinks sympathies are more with helping the taxpayer.

“This is the age of the Tea Party, at least sort of, still, and that makes people even more unsympathetic to the federal tax collector,” Thorndike said. “So it’s not a great time for the IRS to be doing anything other than emphasizing customer service.”

Is the IRS striking the right balance? Tell us on our Facebook page.

Wear an orange shirt, get a pink slip?

Many Life Inc. readers were outraged by a post this week about 14 employees at a Florida law firm who said they were terminated because they were wearing orange shirts.

Some employees told the Sun-Sentinel that management saw the shirts as a sign of protest, but that they really wore the shirts because they wanted to match at a happy hour gathering. The law firm declined comment.

“This whole thing is ridiculous.  Another thought - how many men showed up wearing white button down shirts and a blue tie? Hm? Fire them! It's a conspiracy!” one reader wrote.

Still, some argued that, like it or not, employers can control who they pay.

“Although I think getting rid of all of them was wrong, employers have rights too. They have the right to like or dislike what their employees say, think, and what they do on the job … and yes... they don't have to like everyone wearing orange,” one reader wrote.

It’s tax season, which for some people means refunds -- and for others means the nightmare of dealing with identity theft tax fraud.

The IRS commissioner said this week that the average refund being handed out so far this tax season is about $3,000. About one-quarter of our readers said they expected to receive that much, or more, back from the government.

But most were expecting to see less, if they were getting a refund at all.

Still, many readers said they’d rather give then receive, when it comes to the IRS anyway.

“I would much rather pay than let the IRS keep my money interest free for a year,” one reader wrote.

Doing your taxes is always a pain, but it can be a nightmare for people who were victims of identity theft tax fraud. That's when someone files a bogus return using your information and collects a fake refund.

A story this week on the months of frustrations some people have gone through to get their identity theft problems resolved prompted a lot of outrage, and a lot of sympathy.

“The more I read, the worst I felt for the victims. It's like a nightmare that goes on and on!” one reader wrote.

The IRS has already handed out tens of millions of income tax refunds, and the average refund amount is about $3,000.

IRS Commissioner Douglas Shulman told a House subcommittee Thursday that the IRS had received more than 70 million individual tax returns as of March 10, up about 5 percent from the same time last year.

Shulman said the IRS had issued 59.2 million refunds as of March 10, for a total of $174 billion.

The $3,000 refunds are about the same as last year, according to Shulman’s testimony before a Ways and Means subcommittee.

If you’re more of a procrastinator than an early bird, don’t worry: You still have some time. The tax due datehas been extended to April 17 this year.

Related:

For identity theft victims, paying taxes is a nightmare

After Meghan Bach learned last year that her husband’s identity had been stolen to collect a fake tax refund, she spent perhaps 200 hours working to resolve the issue with the IRS and other agencies.

She thought she had been successful until the family returned home from a vacation this month to find that her husband’s identity had been stolen again.

 “It’s just appalling,” she said.

The IRS has acknowledged that identity theft tax fraud –- stealing someone’s Social Security number to file a fake tax return and collect a bogus refund –- is one of the most complex issues it deals with. Victims describe hours of phone calls, piles of correspondence and long periods of silence in which they aren’t sure whether their problems are being resolved or not.

The tedious process has left some victims worried about what will happen when they file this year’s tax returns.

“Of course I’m nervous,” said Dr. Vera Rosado, 33, who found out last year she was a victim and still has not been able to get it resolved with the IRS.

Rosado, a physician studying infectious diseases in Indianapolis, was recently told to file her fraud affidavit for a second time and her 2010 return for a third time after previous filings was lost. She said the IRS has told her it could take another few months to get the new paperwork processed.

She is waiting to get an approximately $3,000 refund check from last year’s return, which she plans to use toward medical board exams.

The IRS estimates 404,000 people were victims of identity theft tax fraud from mid-2009 to the end of 2011, and officials say the problem is growing.

The agency recently set up a specialized unit to just to deal with identity theft tax fraud, and it is expanding its screening process aimed at flagging this type of fraud. The issue also has attracted the attention of the some U.S. Senators. On Tuesday, a finance subcommittee held a hearing on the matter.

The IRS said it could not comment on specific cases such as Rosado’s and Bach’s because of privacy laws.

Experts say the IRS is working hard to root out identity theft tax fraud in the approximately 140 million tax returns that come in each year. But some believe the problem will get worse before it gets better because it will take time to train staff members to root out and deal with such issues.

“For the next four to five years it’s going to be a learning curve for everybody across the country,” said Jay Foley, a partner with ID Theft Info Source.

Foley said one issue is that IRS employees who aren’t part of the identity theft unit may not know how to handle such complaints. That’s why they might audit tax forms instead of use them in an investigation, for example, or not file paperwork correctly.

He recommends that anyone who is a victim of such fraud work directly with the identity theft unit and also contact the Taxpayer Advocate, an independent agency charged with assistant taxpayers who are having problems.

Foley said the bad news is that there is little people can do to shield themselves from such fraud attempts.

“There’s absolutely nothing that can be done at this point in time that’s going to give you a guarantee of safety,” he said.

Bach, a real estate agent who lives in San Diego, found out her husband had been a victim of identity theft tax fraud in March 2011, when she tried to file their taxes and learned that someone had already filed a return using her husband’s name and Social Security number.

Over the next year, she said she spent several hours each week working with the IRS and other government agencies to get the fraud resolved on behalf of her husband, a military doctor.

At one point, she sent the IRS summaries of her past 10 years of tax returns in order to prove that she and her husband were the true taxpayers. Instead, she said, the IRS audited one of those returns and presented her with a bill for nearly $900.

She paid that bill, then successfully contested a later IRS attempt to audit another past return she had provided to prove her family’s identity.

Eleven months later, the family finally got its refund for the 2010 return and she figured the issue had been resolved. But a few weeks ago, they returned from a Disneyland vacation to find letters from the IRS that had been addressed to her husband had instead been sent to an address down the street that had recently been used as a rental. The mail had been returned to the post office and redelivered to Bach.

One letter, sent to the other address, was informing the family that they had once again been victims of tax fraud for the 2011 tax year. The second letter said that a refund of more than $10,000 was being applied to an existing balance of more than $12,000 that the letter said the family owed the IRS.

Bach said the family had not yet filed their 2011 taxes and was not scheduled to receive a $10,000 refund for the year. They also did not owe the IRS any money – in fact, after their fraud had been resolved, she said the IRS had sent them a refund for 2010 with interest.

Bach surmises that the fraud might have occurred at the address where the IRS correspondence was sent. She doesn’t know if the IRS sent any other correspondence to that address.

Bach and her husband immediately went to the local IRS office to get the address issue corrected. In addition, she said she has left multiple messages with the IRS identity theft case manager she has been working with but has not heard back. She plans to file her real 2011 tax return this week.

Bailey Yahraus, 30, found out four years ago that her husband and young children’s Social Security numbers had been used to file a fraudulent return. The couple got it resolved, and for the next couple years they used a tax filing service to file their returns with no problems.

This year, Yahraus decided to file her return herself using an online tax service. That’s when she found out that her children’s Social Security numbers had already been used by someone else claiming them as dependents.

Yahraus, who lives in Montpelier, Ohio, has been trying to figure out how she can keep the Social Security numbers from being used fraudulently again. She’s worried about what effect the ID theft might have on her kids when they become adults.

But after a rough few years in which both she and her husband lost their jobs and got new ones, she hopes to shield them for now.

“They’re 8- and 9-year-old boys,” she said. “They’re worried about baseball, basketball (and) football.”

Related:

IRS faces surge in identity theft tax fraud 

The federal deficit may be a problem, but most taxpayers don't seem to think it's their problem.

A new Rasmussen Reports poll finds that only about a quarter of Americans would be willing to pay more taxes to help reduce the federal deficit. Nearly two-thirds of those polled said they would not be willing to pay more taxes to reduce the deficit.

The poll of 1,000 adults was conducted earlier this month. 

The results put Warren Buffett in the minority. Last August the billionaire investor famously called on Congress to stop “coddling” the super-rich -- himself included -- and raise taxes on them to help bring the deficit under control.

Many Americans, however, appear to be fine with the likes of Buffett paying more taxes.  A separate poll, released a few months ago by Pew Research Center, found that most Americans believe the biggest problem with taxes is that the wealthy don’t pay their fair share.

If you are feeling like you want to do more to pay down the nation’s debt, there is a way you can do that. The Bureau of Public debt accepts donations. 

The Internal Revenue Service has announced plans to help people who are struggling to pay their taxes because of a job loss or big drop in income.

The new offerings are an expansion of an initiative, called “Fresh Start,” that dates to 2008. This week the IRS said it is expanding the program so it can help more people get back on their feet financially.

“We have an obligation to work with taxpayers who are struggling to make ends meet," IRS Commissioner Doug Shulman said in a statement.

Under the expanded program, the IRS will grant a six-month grace period on failure-to-pay penalties for people who were unemployed for at least 30 days in 2011 or early 2012.

They also will grant the grace period to self-employed people who saw their income fall by 25 percent or more in 2011 because of the weak economy.

There are some restrictions. To quality, the taxpayer’s income must not exceed $100,000 for individual filers or $200,000 for those  filing jointly. In addition, they must not owe more than $50,000 in taxes 2011.

There’s also one caveat: The IRS will continue to charge interest on unpaid back taxes, since it said it does not have the authority to waive that charge.

Did you opt not to go to college? We want to hear from you!

The IRS also said it is expanding a program that lets people pay back taxes in installments rather than a lump sum. The program will now be more readily available to people who owe up to $50,000 in back taxes, and the term of repayment has been extended to 72 months from 60 months.

If you owe more than $50,000, you’ll still have to supply the IRS with some paperwork, and you may also have to pay down your balance somewhat to qualify for the program.

For more information, check out the IRS website.

The Internal Revenue Service is grappling with a surge in identity theft-based tax fraud as crooks take advantage of web-based resources including electronic filing.

Identity theft cases, in which criminals obtain living or deceased people’s names and Social Security numbers to defraud the government, ranked No. 1 on an annual “Dirty Dozen” list of tax scams the agency released Thursday. The IRS called ID theft one of the most complex threats it handles.

The IRS estimates 404,000 people were victimized by identity theft tax fraud from mid-2009 to the end of 2011. 

“We are seeing growth in this area. There’s no way around it,” said Terry Lemons, IRS director of communications. “But I also think that we’ve gotten better at detecting it.”

The IRS said it stopped nearly 262,000 fake returns based on identity theft from being processed in 2011, preventing nearly $1.5 billion in refunds from going to criminals. That is more than a fivefold increase from 2010, when the agency stopped about 49,000 fake returns seeking $247 million in fraudulent refunds.

The IRS said it has no way of knowing how much in fraudulent refunds made it through the system undetected.

Experts say this type of fraud has increased thanks in part to the Internet. The Web has made it easier for honest people to file their tax returns -- and for crooks to file fake returns electronically. The IRS has been on a major push to encourage people to file electronically.

“That was probably one of the biggest boons for the bad guys,” said Jay Foley, a partner with ID Theft Info Source and an identity theft expert.

With more than 100 million income tax refunds to process each year, the IRS concedes it will never be able to quell such tax fraud completely.

“The IRS cannot stop all identity theft. However, we are committed to continuing to improve our programs,” Steven T. Miller, the deputy commissioner for services and enforcement at the IRS, said in written congressional testimony in November.

The agency has added new filters to screen for potential identity theft tax fraud and is working harder to help victims get their rightful refunds.

In late January, the IRS and Justice Department announced a nationwide sweep of arrests, indictments and other actions against 105 suspected perpetrators of the crime in 23 states.

In its testimony to Congress, the IRS said it had initiated 276 investigations into identify theft tax fraud in fiscal 2011, up from 224 the previous year.

The IRS is under tremendous pressure to get taxpayers their refunds as quickly as possible while also accurately screening for fakes. That’s complex because people's lives are complicated. Many of the things that might flag a return as fraudulent -- such as a change in job, mailing address or name -- are legitimate.

The new IRS filters mean that more people’s tax refunds will get extra screening before they go out, Lemons said.

“I think for the vast majority of taxpayers, they’re not going to see any difference,” he said. “There will be some people who end up having some delays.”

ID theft tax fraud tends to occur early in the tax season as criminals try to file before legitimate taxpayers. (For tips on how to prevent and identify identity-based tax fraud, check the guide posted on the IRS website.)

Despite the agency's efforts, Foley, the identity theft expert, expects the problem to get worse before it gets better. That’s because criminals keep finding new ways to evade IRS systems.

Still, he thinks the IRS is doing the best it can given its limitations. People want their legitimate tax refunds as fast as possible, but if the IRS doesn’t catch the fraud before the refund goes out, the agency may not even realize fraud has occurred until long after, when the real taxpayer goes to file a return.

“You can’t fix something until you know something is broke,” he said.

The crime appears to have surged in popularity rapidly.

In Florida, NBC television affiliate WFLA and The Tampa Tribune reported identity theft tax fraud had became so widespread that some people were offering classes in how to commit the crime.

The station's investigation said the criminals dubbed the process “TurboTax” after the popular online software for filing returns.

Julie Miller, a spokeswoman for TurboTax’s parent company, Intuit, said in an email that the company had amped up its own fraud prevention efforts over the past year. She declined to give details for fear of tipping off criminals.

In many cases, the fraud begins when a criminal steals someone's name and Social Security number, and then uses them as a basis to create fake a return that ensures a hefty refund. The refund is sent to an address specified by the fraudster.

Another method involves getting the names, addresses and Social Security numbers of recently deceased people from websites such as Ancestry.com, which are meant to help people find their long-lost relatives.

A spokeswoman for Ancestry.com, Heather Erickson, said the company didn’t notice anything unusual. But around December, after being alerted to the problem, the website stopped showing Social Security numbers for anyone who had died in the past 10 years.

Related:

Cheat on taxes? Never! Or, as much as possible

See more coverage of this issue from Tampa Bay Online

IRS: Taxpayer guide to identity theft

Updated at 1:45 p.m. ET Friday: An IRS spokeswoman said Friday that the problems with the Where's My Refund tool have been fixed and it is now working.

Original post:

The Internal Revenue Service said Wednesday that its tool that lets people check on the status of their refunds is not currently working.

“We’re having some technical difficulties right now but expect to have this resolved soon. We apologize for the inconvenience,” the IRS said in statement posted to its website midday Wednesday.

An IRS spokeswoman told msnbc.com Wednesday that the agency is working hard to fix the problem but didn’t know exactly when it would be resolved.

However, she said the glitch only is affecting whether people can track their refunds. The refunds are still being processed normally.

This is the second time in a week the IRS has had problems with the Where’s My Refund tool. Last Friday, it posted a notice acknowledging that some taxpayers who filed electronically could not find their information on the Where’s My Refund tool. The spokeswoman said that issue has since been resolved. 

Tip of the hat to SFGate, which initially posted a story on the problem.

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