FuturProof #176: Blockchain Non-Financial Use Cases - Tax Refund Fraud (7/30)

The IRS estimates that $31 billion in income tax refunds were paid to fraudsters in 2018 alone. Tax fraud is such a big problem in the US that the IRS publishes an annual “Dirty Dozen” list to warn taxpayers of common frauds and scams.

On the other side, 5.2 million tax refunds were flagged for possible fraud in 2019 and delayed until additional screening was done. 63% of the refunds flagged for identity verification end up being legitimate. Taxpayers have to wait and the IRS has to pay interest for the delay. Basically, the system is broken and taxpayers are getting hurt. 

Solution: A tax payment and refund platform built with open architecture and around secure private keys. 

• Each taxpayer is attached to a public wallet where payment and refund requests can only be made using a private key.
• Private keys can either be used to utilize funds in public wallets or update details for attached bank accounts.
• One-off distributions like the COVID relief payments can be made directly to the public addresses or the attached bank accounts.
• Smart contracts can be built to make recurring or one-time tax payments automatically depending on income and accounting periods.

The current system is set up to prevent fraud but not minimize false positives. The IRS is consistently under-resourced to solve the problem because of a rise in the number and sophistication of frauds. The solution is to use technology to create a system that solves the root cause, instead of spending more taxpayer dollars to throw more bodies at it without fixing the problem.

Disclaimers: http://bit.ly/p21disclaimers

Not any type of advice. Conflicts of interest may exist. For informational purposes only. Not an offering or solicitation. Always perform independent research and due diligence.