Boston University School of Law

 

E-VERIFY CAN STOP
REFUND FRAUD


Richard Thompson Ainsworth
Boston University School of Law

Andrew Shact
VP and Tax Counsel, Hologic, Inc.

Boston University School of Law Working Paper 13-6
(March 27, 2013)

Abstract

Two issues in the current Washington debates need to be linked.  E-Verify, the Internet-based database that allows employers to verify an employee’s work eligibility that is at the center of the immigration debate, is the ideal tool for stopping tax refund fraud.  All that is needed is a digital signature of the E-Verify result, and the mandatory inscription of this signature on tax documents to make them self-authenticating. 

The central features of this proposal have been made before.  The technology it requires is tried and proven.  The processes and procedure it advocates are in place and effectively deployed in foreign jurisdictions, notably in VAT jurisdictions enforcing against VAT fraud.  

The heart of this linkage (the E-Verify/refund fraud linkage) is numerical.  At least $5.2 billion in annual revenues are being lost through refund fraud – the cost for businesses to implement a fully mandated E-Verify system is $2.7 billion.  If E-Verify solves refund fraud, there are funds available for a business credit with a considerable amount of money left over. 

The $5.2 billion figure comes from the Treasury Inspector General for Tax Administration (TIGTA) who found that in Processing Year 2011, identity theft cost the US taxpayer in excess of $5.2 billion in undetected fraudulent tax refunds, and estimated $21 billion in losses over five years.  The $2.7 billion figure comes from a Bloomberg Report for the same time period indicating that a fully mandated E-Verify system for all employers would cost $2.7 billion (almost all of it in training expenses related to system implementation and worker appeals).

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Richard Thompson Ainsworth Contact Information
vatprof@bu.edu
LL.M. Tax Program
Boston University School of Law
765 Commonwealth Ave
Boston, MA 02215

USAPhone: (781) 773-1052

Andrew Shact
VP and Tax Counsel, Hologic, Inc.
Email: andrews02481@yahoo.com

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