IRS, States and Tax Industry Adding New Safeguards to Curb Identity Theft

IRS, States and Tax Industry Adding New Safeguards to Curb Identity Theft

The Internal Revenue Service met with a group of state tax administrators and tax industry leaders Tuesday to discuss additional steps they are taking for next tax season to strengthen safeguards against identity theft and tax refund fraud.

The public-private sector partnership announced success in identifying and testing more than 20 new data elements on tax return submissions that will be shared with the IRS and the states to help detect and prevent identity-theft related filings. In addition, the software industry is putting in place enhanced identity requirements and validation procedures for their customers to protect accounts from identity thieves.

“We’re here to give you an update on the protections we are putting in place for the upcoming filing season to better safeguard taxpayers and the tax system against stolen identity refund fraud,” said IRS Commissioner John Koskinen during a press conference. “As I said before, this is not a battle the IRS can fight alone. Joining me today are representatives of the electronic tax industry, the software industry and the states. These members of our Security Summit group have collaborated with the IRS since day one. We began mapping out a strategy in March and together we have made significant progress in just a few months.”

He noted that the collaborative group has added more members. “We now have 20 major players in the tax and financial industry working with us on this effort,” said Koskinen. “This is significant because the Security Summit now covers virtually the entire population of taxpayers who e-file their tax returns.”

Koskinen pointed out that 34 states have now signed the memorandum of understanding, with even more planning to sign on in the weeks ahead. “It’s significant because 32 of the 42 states that have an income tax have already signed on,” he said. “It’s critical for us to continue making progress on this area because refund fraud related to identity theft has become a more complicated and serious threat to the nation’s tax system.”

Koskinen acknowledged that over the last few years the IRS has seen an increase in identity theft crimes being perpetrated by organized crime syndicates around the world. “These criminals have been able to gather enormous amounts of personal data from sources outside the IRS,” he said. “This makes protecting taxpayers more challenging and difficult, so I’m delighted to report that for next year’s tax-filing season we are on track to fulfill our goal of having new safeguards in place for taxpayers when they file their return.” Read more on Accounting Today.