The Internal Revenue Service sent $4 billion to identity thieves filing fraudulent tax returns in 2012, at the same time it was devoting resources to invasive politically targeted audits of not-for-profit groups, according to a recent report released by Treasury Inspector General J. Russell George.

The IRS, which is now overseeing Obamacare’s complicated implementation and collecting its tax penalties, sent 343 tax refunds to a single address in Shanghai, and another 655 tax refunds to one in Lithuania, according to CBS News.

A statement detailing a similar report filed by the Treasury Inspector General for Tax Administration found 1.1 million fraudulent tax returns were filed with clearly fabricated Social Security numbers that IRS could have detected, costing taxpayers $3.6 billion in 2011.

“Identity theft continues to be a serious problem with devastating consequences for taxpayers and an enormous impact on tax administration,” George said in the statement. “Undetected tax refund fraud results in significant unintended Federal outlays and erodes taxpayer confidence in the Federal tax system.”

George, a former White House staffer who has volunteered for both Democrats and Republicans, incurred the wrath the wrath of House Democrats during the IRS tea party targeting hearings in July. His audit revealed that the IRS subjected conservative groups to extra delays and unconstitutional scrutiny — including asking Christian groups to provide “both sides of the issues” and detail the content of their members’ prayers — while withhold approvals and slow-walking applications. (Related: IRS commissioner stonewalls on prying into pro-life group’s prayer)

The tax authority also gave different treatment to groups that it flagged as political, sparing progressive organizations the rough treatment it continues to mete out to conservative, Christian and pro-constitution groups.

Approximately 2.8 million taxpayers were affected by the IRS’s failure to catch identity thieves from 2012 to 2013, the TIGTA found — a time frame that overlaps with the agency’s aggressive harassment of conservative groups and its efforts to cull them from the political herd as the 2012 election carried on.

Follow Katie on Twitter