Problem of Identity Theft and Fraudulent Tax Refunds in the United States: Considering the Possible Developments Following a Future Consumption Tax Increase and Introduction of the Social Security and Tax Number System

　This report discusses the need to design the tax system and considers the possible developments following a future consumption tax increase and introduction of the social security and tax number system (the "My Number" system).

　 Progress has both favorable and adverse effects, and fraud always occurs to some extent. Recent technological advancements have dramatically increased convenience in our daily lives. At the same time, however, the remote controllability of systems has given rise to such incidents as furikome fraud (bank transfer fraud). This report examines the actual status of identity theft and fraudulent tax refunds in the United States. It is little known that a large number of tax returns for refunds are filed in Japan. Every year, more than 20 million income tax returns are filed, of which 50% are returns for refunds. The amount of tax refund payments is equivalent to one-fifth of the total tax revenue. By tax item, consumption tax refunds are overwhelmingly large, standing at \3-4 trillion. Tax evasion and fraudulent tax refunds involving consumption tax are also notable. From its inception, the consumption tax collection system has had a structural defect, and if taxes are raised without addressing this defect, the problem is likely to worsen. The launch of the My Number system in 2015 is expected to improve the situation, making it easier for tax authorities to comprehend taxpayers' taxation status. However, when designing the new tax systems important lessons can be learned from the experience of the U.S. .....