Tax identity fraudsters stealing billions of dollars from hijacked tax accounts. Inspector-General of Taxation launches probe.

Inspector-General of Taxation Karen Payne is investigating the theft and hijacking of personal information that's allowed millions of dollars of tax fraud by professional scammers.

LISTEN: I speak with Inspector-General of Taxation Karen Payne

Ms Payne - whose agency probes complaints about the Australian Taxation Office - has raised concerns that criminals have been using stolen identities to infiltrate the tax system to change details and then illegally claim tax refunds belonging to another taxpayer.

Here's a special I did for ABC News On Demand

The Inspector-General is investigating 130 complaints the ATO is yet to resolve and says evidence of infiltration by scammers to steal tax refunds potentially undermines faith in the security of personal details and tax accounts.

"It does rattle confidence in the tax system. What I'm concerned about is whether the tax system itself and the  checks and balances within that system are working so that this doesn't happen," Ms Payne told the ABC's "AM" program.

"How many of those tax debts have been created because people have fraudulently access people's personal details to claim refunds they're not entitled to? How has somebody been able to infiltrate the tax system?"

Ms Payne says scammers have been able to reap windfall refunds as part of a criminal bonana. 

"We have an idea that it's actually in the millions (of dollars). And that's a significant sum of money that that warrants further investigation by our agency," Ms Payne said.

The Australian Taxation Office has agreed to meet with Ms Payne in early 2024 to provide a briefing on the extent of the tax identity fraud.

"These are cases that the ATO has not been able to resolve satisfactorily. These are the cases that the Tax Office didn't resolve to the satisfaction of the complainant," Ms Payne said.

"These are unsuspecting individual taxpayers who've had their accounts compromised and use to perpetrate a fraud in the tax system. Why is that not being caught before the money goes out the door?"

A spokesperson for the Australian Taxation Office says they're aware of the Inspector-General's investigation that the ATO has sophisticated processes across its systems to detect fraud. 

"Our systems and controls are strong. We are working with the Inspector-General to assist with this investigation," the spokesperson said.

"The ATO is not, nor have we ever been, complacent when it comes to security and fraud prevention."

Taxpayers who suspect they're victims of tax identity fraud should call 1-800-467-033 and a complaint can be lodged with the Australian Taxation Office.