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Billions of dollars went to undetected identity thieves filing fraudulent tax returns in 2011, according to a new audit report by the Treasury Inspector General for Tax Administration (TIGTA).

The Internal Revenue Service (IRS) inspector general says more than 900,000 tax returns totaling $6.5 billion in fraud were detected for the 2011 processing year.

The issue is so severe, the IRS could issue $21 billion in fraudulent tax refunds over the next five years, according to the report.

The report lists possible reasons for the IRS not detecting the "billions of dollars' worth of identity-theft tax refund fraud."

The reasons listed by the TIGTA include:

- Delayed access to third-party income and withholding information. These delays make it difficult for the IRS to detect fraudulent tax refunds at the time tax returns are processed. Third parties are not required to submit income and withholding documents to the IRS until March 31, yet taxpayers can begin filing tax returns in mid-January.

- The IRS has not developed processes to obtain and use the third-party information that is available at the time tax returns are filed.

- The use of direct deposits, including debit cards, to claim fraudulent tax refunds increases the risk that the IRS will not detect identity theft. The IRS continues to allow multiple direct deposits to the same bank account.

According to WNWO Northwest Ohio, an IRS  spokesperson says the agency is devoting significant resources to combat tax fraud, and calls the inspector general's projection of more than 20 billion in fraudulent payouts in the coming years significantly overstated.

The report says the top five cities from which potentially fraudulent tax returns were filed in 2011 were Tampa, Miami, Atlanta, Detroit and Houston.