The Internal Revenue Service was duped into paying nearly $6 billion to identity thieves in just one year, and it could have been a lot worse.

The $5.8 billion that the IRS paid to fraud perpetrators in 2013 represented just 20% of all the phony returns it received, according to a report (pdf) by the Government Accountability Office (GAO). In other words, the agency caught and rejected about 80% of the returns sent in by identity thieves.

But doing better than that will be difficult, IRS officials contend, unless it gets more funding from Congress. Lawmakers, particularly Republicans, have been more interested in slashing the IRS budget than restoring it.

 “Since 2010, the agency has absorbed approximately $900 million in budget cuts while also facing an increasing workload due to legislative mandates, priority programs…and [identity theft] refund fraud,” the GAO wrote in its report.

The IRS asked for nearly $65 million more in funding for fiscal year 2015 to combat identity thieves and fraud. Lawmakers responded by taking another $346 million out of the IRS budget, pushing the total in cuts over the past five years to $1.2 billion, according to Eric Katz of Government Executive.

-Noel Brinkerhoff

To Learn More:

Identity Theft and Tax Fraud: Enhanced Authentication Could Combat Refund Fraud, but IRS Lacks an Estimate of Costs, Benefits and Risks (Government Accountability Office) (pdf)

IRS Paid Identity Thieves $5.8 Billion in 2013, Blames Budget Cuts (by Eric Katz, Government Executive)

FTC Logs more than $1.6 Billion in Fraud Complaints in One Year (by Steve Straehley, AllGov)