Bad Checks Cost Uncle Sam $20 Million

(MoneyWatch)  Mystery shoppers aren't the only ones getting taken by bad checks. The federal government is getting hit too.

A report released today says that the Internal Revenue Service has provided some $53 million in tax refunds to people who supposedly overpaid their taxes by check. But guess what? The refunds were processed before the government found out that the taxpayers checks bounced.

Ultimately, the mistake cost Uncle Sam $20 million in just the first six months of 2008.

"The IRS must develop an effective system to prevent refunds for over payments from being generated until it knows that the original payments have cleared the bank," said J. Russell George, the Treasury Inspector General for Tax Administration. "This would protect approximately $102 million over the next five years from being issued to taxpayers in error."

For other recent news on the bad check front, see:

Mystery Shopper Scam Alert
Fake Check Alert: How to Sidestep the Scam
Charity Business Opportunity Could Drain Your Bank Account