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In 2014, more than 85 million Americans received a refund from the Internal Revenue Service. It is money they want quickly, money they count on. The IRS has worked hard to speed up the refund process.
At the same time, criminals try to scam the system by submitting bogus returns. In fact, the nation’s tax refund system is under continuous attack. The challenge: how to catch and stop fraudulent tax refunds—without slowing down the overall refund process?
The IRS turned to Booz Allen to enhance the agency’s Fraud Detection Program and, in particular, manage the “EFDS”—Electronic Fraud Detection System. The agency’s “first line of defense,” the EFDS scans all 145 million plus tax returns within hours of receipt and assigns a risk score. The risk score determines if a return will be processed (and, where appropriate, a refund issued), or requires further review. For Booz Allen, the challenge was twofold: improve the system’s performance and enable ongoing modifications to an incredibly complex system, with minimal disruption. In particular, the Booz Allen team:
“The agency’s first line of defense, the EFDS, scans all 145 million plus tax returns within hours of receipt and assigns a risk score.”
The results are impressive. In 2012, the enhanced EFDS flagged more than 2.7 million potentially fraudulent returns and protected $16 billion in potential revenue loss—a 200 percent increase from the previous year and a 2,185 percent increase from when Booz Allen took over management of the system. Over the same period, the IRS has maintained its commitment to getting legitimate refund checks in the hands of taxpayers quickly. In recognition of these outstanding results, the Booz Allen-developed fraud detection system won the IRS “Commissioner’s Award” in 2012. In sum: a tighter net to catch fraudulent refund requests, but not at the expense of the millions of Americans waiting for their well-earned refund.