IRS’s Outdated Fraud Prevention System Could Cost Taxpayers Millions

 The Internal Revenue Service’s systems for detecting fraud may wind up costing taxpayers millions, a Treasury Inspector General for Tax Administration audit found.

According to the report, the IRS has been using a program, the Electronic Fraud Detection System, developed in 1994, as its primary safeguard against fraud. But due to software limitations of the EFDS, the agency has been testing an alternative for the past two years.

Upkeep of the EFDS in conjunction with the development of its projected replacement, the Return Review Program (RRP), could cost taxpayers upwards of $18.2 million annually. The agency says keeping the old system in place would be even more costly in the long run.

Sen. Chuck Grassley sent a letter to the IRS Commissioner John Koskinen in 2014 expressing his concerns over its 2015 plans for fraud prevention. The Iowa Republican said it is “alarming” a new system had not been implemented since the agency said it was “too risky to maintain, upgrade, or operate beyond 2014.”