Government Stiffed Millions in Revenue Collection Due to Bounce Checks and Fraudulent Tax Returns

The V.I. Bureau of Internal Revenue says it is working on putting measures in place to counter instances of fraudulent tax returns and the issuance of bounce checks during tax collection.

Over the last two years, the bureau has recorded $2 million dollars in bounce checks issued for tax contributions and 13,000 error returns — a portion of which have been recorded as fraudulent income tax returns.

In its testimony before the Committee on Finance on Wednesday, the bureau noted that it was “inundated” with a number of fraudulent returns, as taxpayers attempted to recover stimulus payments that they were not entitled to.

Attorney Tamarah Smalls, B.I.R. chief counsel explained that 90 percent of the errors occurred after the start of Covid-related stimulus payments.

“We also have in 2020 taxpayers that are taking the recovery rebate credit which is the credit for the stimulus payments,” she added.

Senator Novelle Francis suggested that issuing bounce checks to the government could be considered a federal crime since individuals were withholding federal funds from the government.

The senator urged B.I.R. to speed up its telecheck implementation because the bureau remains at a disadvantage without it. "...We need to send a strong message. We can’t have individuals issuing these worthless documents,” he insisted.

“Things happen and we understand that but $2 million worth – that’s a problem,” Mr. Francis said. He also suggested filing police reports on persons who file fraudulent returns as a deterrent to issuing false documents to the bureau.