IRS will be hemorrhaging $21 billion by 2016 from tax return fraud alone. I believe there could be a simple, albeit, slightly inconvenient fix. The fraud is being committed by people who have stolen social security numbers from point-of-sale databases. No proof of identity is required to file an IRS return. We could have taxpayers prove who they are, with multiple pieces of ID, and receive an additional code, used for IRS business only.
This process may be an inconvenience, but it would be extremely worthwhile. The government could temporarily hire agents to perform this task exclusively in IRS offices across the country. They could open kiosks in malls staffed with IRS personnel where it’s convenient. Spending money to make this happen will save billions of dollars. If this code were to be held only in the IRS database and by the taxpayer but not in POS databases. such as Target and Home Depot. it would practically eliminate this problem.