IRS, States, Private Sector Join to Stem ID Tax Fraud (June 15, 2015)
By Adam Perrotta, Assistant Editor
The IRS has announced a wide-ranging, public-private plan to combat identity theft and tax refund fraud. The agency is collaborating with tax preparation software firms, payroll and tax financial product processors, and state tax administrators on the initiative to stem the growing problem of ID-related tax fraud—a multibillion-dollar enterprise in the U.S.
Under the plan, the partners will cooperate to add new ID-verification steps to validate taxpayers and tax return information when filing. The initiative also calls for increased information sharing between the tax preparation industry and government agencies; sharing of suspected fraudulent data and analytics will be standardized and formalized to enable partners to identify fraud patterns. Increasing awareness about tax ID fraud among consumers is another goal of the partnership. Many of the major system and process changes in the new initiative will be made this summer, in time for the 2016 filing season, the IRS said.
“This agreement represents a new era of cooperation and collaboration among the IRS, states and the electronic tax industry that will help combat identity theft and protect taxpayers against tax refund fraud,” said IRS Commissioner John Koskinen. “Taxpayers filing their tax returns next filing season should have a safer and more secure experience.” The public-private partnership will continue to collaborate on an ongoing basis to address fraud-related issues moving forward, he added.
The initiative stems from a special security summit the IRS convened in March with leaders of private sector firms and federal and state tax administrators to identify new ways to combat ID-related tax fraud, which comprised the largest portion of the $5.2 billion in tax fraud in the U.S. in 2014, according to the GAO. Just last month, the agency announced cybercriminals had breached its systems and accessed the personal information—including Social Security numbers, birth dates and street addresses—of 100,000 taxpayers.